Solana, Cardano, and Other Altcoins May Struggle to Gain SEC Approval as Spot ETFs

Katalin Tischhauser, head of investment research at Sygnum Bank, shared concerns similar to other commentators about the likelihood of these assets joining Bitcoin and Ethereum as spot crypto ETFs.

Solana, Cardano, and other altcoins might face an uphill battle in securing approval for spot exchange-traded funds (ETFs) in the United States. Katalin Tischhauser, head of investment research at Sygnum Bank, expressed concerns that these assets may struggle to join Bitcoin and Ethereum in the world of spot crypto ETFs.

The Securities and Exchange Commission (SEC) has stringent criteria for approving ETFs. According to Tischhauser, a key issue is the absence of regulated trading venues that meet the SEC's standards for market surveillance.

The SEC aims to safeguard against market abuse, fraud, and manipulation by monitoring the underlying market through regulated venues such as the Chicago Mercantile Exchange (CME). However, the exchanges that currently host altcoins are largely viewed as “unregulated securities exchanges,” rendering them unsuitable for the SEC's purposes.

For Bitcoin and Ethereum, the availability of CME futures provided a solution to this problem. However, other altcoins lack such infrastructure, which could complicate their chances of ETF approval.

Moreover, Tischhauser anticipates that despite the popularity of Bitcoin and Ethereum ETFs, there may be limited interest in ETFs for other altcoins. She noted that beyond the top two cryptocurrencies, the level of awareness drops significantly.

Highlighting this point, Ethereum is already less well-known than Bitcoin among the general public, and tokens like Solana are even less recognized outside the crypto sphere. This lack of mainstream awareness could affect the demand for ETFs tracking these assets.

To illustrate, spot Bitcoin ETFs have seen substantial inflows, with an estimated $17.7 billion invested. In contrast, spot Ether ETFs initially experienced net outflows, partly driven by investors shifting away from the Grayscale Ethereum Trust (ETHE).

The Grayscale Solana Trust (GSOL) currently manages $78.6 million, a small sum compared to the ETHE's $6.3 billion in assets under management.

However, Matthew Sigel, head of digital assets research at VanEck, offers a differing perspective on the matter. He expressed disagreement with the notion that only Bitcoin and Ethereum would be viable candidates for ETF approval.

Sigel pointed out that in Europe, there is a broad range of crypto ETPs available, covering both single coins and baskets. He also mentioned that VanEck has filed for a Solana ETF with the SEC, indicating their intention to expand the ETF market.

This situation highlights ongoing discussions within the investment community about the future of altcoin ETFs.

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