The recent filings for spot Solana exchange-traded funds (ETFs) by VanEck and 21Shares could trigger a wave of similar products for other cryptocurrencies in the US, according to a report by GSR, a leading market maker.
Solana’s established position among the top three cryptocurrencies undoubtedly influenced these filings. However, the report suggests this might be just the beginning, with XRP and Cardano likely to be the next contenders in the ETF arena.
Decentralization and Demand: Key Factors for Approval
GSR’s report highlights two key criteria for determining the next-spot crypto ETF: decentralization and potential demand.
“Decentralization could be a deciding factor for an ETF listing,” the report states, acknowledging the gradual decentralization of most public blockchains over time. Cardano, for instance, is poised to become more decentralized with the upcoming Voltaire upgrade, which empowers greater network governance decentralization. While Cardano’s current decentralization score remains negative, Charles Hoskinson’s promise of an upgrade later this month could significantly improve its chances for a spot ETF.
Demand also plays a crucial role. XRP currently ranks fourth in demand analysis, following Ethereum, Solana, and NEAR. Its established popularity within the cryptocurrency industry makes it an attractive option for issuers.
“While crypto-focused issuers might propose numerous spot ETF products, we anticipate larger issuers to prioritize just one or two with both robust decentralization and high demand,” predicts GSR.
Shifting Regulatory Landscape Paves the Way
The report also explores the evolving regulatory landscape in the US. While some believe the lack of a futures market might hinder further spot altcoin ETF approvals, GSR anticipates a shift in regulations.
The report notes former President Donald Trump’s recent emergence as a vocal supporter of the cryptocurrency industry. Additionally, Democrats are softening their stance to attract crypto-savvy voters. GSR posits that a liberal Commissioner appointed to the US Securities and Exchange Commission (SEC) under the next administration could significantly expedite the launch of multiple spot crypto ETFs. Bloomberg ETF analyst Eric Balchunas echoes this sentiment, emphasizing that a crypto-friendly SEC Commissioner will likely pave the way for more spot crypto ETFs in the US.
With the regulatory landscape potentially favoring crypto and established players like XRP and Cardano possessing strong demand, the future for crypto ETFs appears bullish. As Solana ETFs inch closer to reality, investors are eagerly watching to see which digital assets will be next in line to experience an ETF-fueled surge.
