Solana, Cardano, and other cryptocurrencies may encounter significant challenges in their quest to become spot exchange-traded funds (ETFs) in the United States. This is according to Katalin Tischhauser, head of investment research at Sygnum Bank, who echoes the skepticism of many other industry experts.
The primary roadblock is the Securities and Exchange Commission’s (SEC) stringent requirements for market surveillance. Unlike Bitcoin and Ethereum, which have established futures markets on regulated platforms like the Chicago Mercantile Exchange (CME), most altcoins lack this crucial infrastructure. The SEC mandates these regulated venues for monitoring market integrity, ensuring fairness, transparency, and protection against manipulation.
Currently, crypto exchanges are not considered regulated market venues by the SEC. If this classification changes and platforms like Coinbase are accepted for surveillance, it could pave the way for more crypto ETFs. However, even if regulatory hurdles are cleared, industry experts believe that demand for altcoin ETFs may be limited.
Bitcoin and Ethereum have achieved substantial name recognition beyond the crypto community. In contrast, Solana and other altcoins have a significantly smaller following, potentially dampening investor interest. This is reflected in the performance of the Grayscale Solana Trust (GSOL), which has a much smaller asset under management compared to its Bitcoin and Ethereum counterparts.
While some, like VanEck, remain optimistic about the potential for altcoin ETFs, the consensus among many industry leaders is that Bitcoin and Ethereum will likely dominate the ETF landscape for the foreseeable future. The recent success of spot Bitcoin ETFs, attracting billions in inflows, underscores this trend.
As the crypto industry continues to evolve, the regulatory environment and investor sentiment will play crucial roles in determining the fate of Solana and other altcoins in the ETF arena. For now, the path to ETF approval appears challenging, with significant obstacles to overcome.