The recent approval of the spot Ethereum ETF has given the crypto community hope for the launch of other altcoin-based funds. The U.S. Securities and Exchange Commission (SEC) approved applications for spot Ethereum ETFs, and the cryptocurrency community sees this move as an opportunity to launch funds with other leading altcoins, including Solana ETFs.

How a Spot ETF Works

A spot ETF is a tool through which stock exchange participants can invest in digital cryptocurrency without purchasing and storing it in physical form. This procedure is based on tracking the actual market price of the asset. After purchasing shares of a spot ETF, the investor receives a stake in the fund. The fund represents a certain volume of cryptocurrencies in their real form, managed by fund specialists.

With a spot Bitcoin ETF, investors gain exposure to cryptocurrency without the need to purchase, hold, or manage their portfolios independently. This can provide impetus for increased investment in the cryptocurrency market.

Acceptance of Crypto ETFs in the U.S.

At the end of 2021, the SEC allowed the launch of futures Bitcoin ETFs for the first time. Then, in January 2024, the SEC approved the first 11 spot Bitcoin ETFs. Grayscale’s lawsuit against the SEC was crucial in changing the regulator’s position. The victory in the case and the subsequent recognition of the legality of spot ETFs made it possible to bridge the gap between digital and traditional assets. Grayscale, which previously operated the Bitcoin Trust with certain restrictions, now has the opportunity to transform into a full-fledged ETF.

Altcoin ETFs

The SEC approved Forms 19b-4 for eight Ethereum-based exchange-traded funds (Grayscale, Bitwise, BlackRock, VanEck, ARK 21Shares, Invesco, Fidelity, and Franklin) in a single decision, marking the beginning of altcoin-based ETFs. Following the approval of the Ethereum ETF, the crypto community is curious whether funds based on other popular altcoins will also be approved.

Solana ETF

Solana (SOL), a notable player in the blockchain sector, could also be a candidate for its spot ETF. The creation of the Solana ETF is still subject to regulatory approval. To achieve this, the fund issuer must demonstrate that the funds comply with all legal and regulatory standards, including investor protection and market integrity. While the exact timing of approval remains unclear, experts believe Solana could soon enter the cryptocurrency spot ETF market.

What Industry Participants Are Saying

Brian Kelly, CEO of the investment company BKCM, stated that after the legalization of spot Ethereum ETFs, Solana ETFs will enter the American stock market. This altcoin will become a main competitor to ETH.

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” which could very easily make this a rocky road.

Bloomberg ETF analyst James Seyffart noted that after Bitcoin and Ethereum ETFs, exchange-traded fund providers will likely turn their attention to Solana. He mentioned that it might take a couple of years before the crypto derivatives market is fully supervised by the U.S. Commodity Futures Trading Commission (CFTC). The expert emphasized that the approval of the bill “On Financial Innovation and Technologies for the 21st Century” (FIT21) could speed up this process.

Based on current precedent/needs — Will happen within a few years of getting a CFTC regulated futures market. But congress & Market structure bills like FIT21 could make it happen quicker. I think a SOL ETF would see most demand vs other digital assets (aside from BTC & ETH).

Hunter Horsley, CEO of Bitwise Investment, claimed that by the end of 2024, the cryptocurrency community will be surprised at how many financial concerns will invest their capital in Bitcoin spot ETFs. Distributing a new class of digital assets will make the crypto market even more attractive to investors.

By the end of 2024, people are going to be stunned by how many wealth management firms own a bitcoin ETF. They’re smart, many extremely well informed, and increasingly share conviction on Bitcoin. Oh, and they’re long only. Going to be an amazing new constituent in the market.

Tristan Frizza, founder of Zeta Markets, commented that many consider BTC, ETH, and SOL to be the three significant cryptocurrencies of this market cycle. Therefore, with the approval of the ETH ETF, SOL will likely be the next ETF candidate.

While Bitcoin has been touted as ‘digital gold’ and Ethereum has institutional focus, Solana is the network embraced by retail users with consistently among the highest activity metrics. The recent booms of protocol launches and token TGEs on Solana have also brought a lot of attention, users, and capital inflow to the network, and the anticipation of further growth will make it seem more than likely to place Solana as a lead asset to be considered for the ETF.

While nothing is clear yet, the impact of such ETF approval will likely attract subsequent attention, capital, developer, and user activity, which will further energize Solana’s existing growth, Frizza concluded.

The SEC’s approval of Bitcoin spot ETFs has sparked interest in the potential of Solana-based ETFs, which could make investing in the SOL token more accessible to everyone. Approving an altcoin ETF would be a significant milestone, potentially similar to approving the spot Bitcoin and Ethereum ETFs. It would attract more institutional players to the cryptocurrency market.

Stay updated with the latest developments in the cryptocurrency space at Global Crypto News.

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