The prospect of a spot Solana (SOL) exchange-traded fund (ETF) has sparked a debate following a prediction by CNBC contributor and crypto investor Brian Kelly.
During a Fast Money episode on May 22, Kelly suggested that Solana could be the next cryptocurrency to receive a spot ETF in the United States, after Bitcoin (BTC) and Ethereum (ETH).
TLDR
- CNBC contributor and crypto investor Brian Kelly sparked debate by suggesting Solana could be the next cryptocurrency to receive a spot ETF in the U.S., following Bitcoin and Ethereum.
- Nate Geraci and James Seyffart believe a spot Solana ETF is unlikely until a CME-traded Solana futures product is listed or a proper regulatory framework is in place.
- The SEC has flagged Solana as a security in previous lawsuits, which could complicate the ETF approval process.
- Some analysts argue that Litecoin or Dogecoin might be more likely candidates for the next spot ETF due to their proof-of-work consensus mechanisms aligning with regulatory expectations.
- Bitcoin maximalists strongly oppose the potential introduction of a Solana ETF, arguing that expanding the ETF market to include altcoins could dilute the perceived value and legitimacy of Bitcoin.
Kelly’s prediction comes amidst growing anticipation for the Securities and Exchange Commission’s (SEC) decision on at least one proposed spot Ether ETF, expected on May 23.
The potential approval of an Ethereum ETF has not only driven up the price of ETH but has also generated significant interest in Solana as a strong candidate for the next ETF consideration.
Oh weird @cnbc says $SOL is the next ETF.
Hmm, where have I heard that before… pic.twitter.com/aYAedMhcM0
— ◢ J◎e McCann ???? (@joemccann) May 22, 2024
However, not everyone agrees with Kelly’s assessment. Nate Geraci, president of The ETF Store, and Bloomberg ETF analyst James Seyffart believe that a spot Solana ETF is unlikely until a Chicago Mercantile Exchange (CME) traded Solana futures product is listed or a proper regulatory framework for cryptocurrencies is put in place by Congress.
They argue that the SEC’s classification of Solana as a security in previous lawsuits against Coinbase and Kraken could further complicate the ETF approval process.
But SEC isn’t dancing around SOL’s status like they have ETH. Those lawsuits against COIN and Kraken and others flat out say “Solana is a security” lol. Which could very easily make this a very rocky road
— James Seyffart (@JSeyff) May 22, 2024
Despite the challenges, some market analysts remain optimistic about Solana’s prospects.
Daniel Yan, co-founder of Matrixport, suggested that investing in Solana instead of Ethereum may offer a more promising trading opportunity with greater potential for gains, given the less competitive market and the possibility of investors shifting their focus to Solana after positive developments in the Ethereum market.
A better trade I will argue for is: “BUY SOL/ETH”. This may sound absurd and definitely unpopular. Reasons are:
1) SOL will be the No.1 next in line if ETH ETF get approved.
2) ETH/BTC did +12% within a week after the BTC approval as people expect ETH ETFs
3) Not a crowded trade— Daniel Yan (@_D_Y_A_N) May 21, 2024
On the other hand, Cinneamhain Ventures partner Adam Cochran proposed that Litecoin (LTC) or Dogecoin (DOGE) might be more likely candidates for the next spot ETF due to their proof-of-work consensus mechanisms aligning more closely with regulatory expectations.
This view is supported by the fact that both Litecoin and Dogecoin have been in the market for a longer period and have established a stronger track record compared to Solana.
The debate surrounding the potential introduction of a Solana ETF has also drawn criticism from Bitcoin maximalists, who argue that expanding the ETF market to include altcoins could dilute the perceived value and legitimacy of Bitcoin.
“The Bitcoin Therapist,” a notable Bitcoin maximalist, expressed concerns that the inclusion of Ethereum in the spot ETF market has already led to a flood of lesser-known cryptocurrencies, often referred to as “shitcoins.”
As the crypto community awaits the SEC’s decision on the proposed spot Ether ETF, the speculation around Solana and other altcoins continues to grow.
While the approval of an Ethereum ETF could potentially pave the way for other cryptocurrencies to follow suit, the regulatory hurdles suggest that the path to a spot Solana ETF may not be as straightforward as some believe.
