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Solana vs Litecoin and Dogecoin: The next cryptocurrency ETF debate
BKCM CEO Brian Kelly recently predicted on CNBC’s “Fast Money” that Solana (SOL) could be the next cryptocurrency with an exchange-traded fund (ETF) in the United States. Kelly’s prediction clashed with growing interest in cryptocurrencies and anticipation of the SEC’s decision regarding the proposed Ether spot ETF.
Key Takeaways from Brian Kelly
Kelly said Solana ranks alongside Bitcoin (BTC) and Ethereum (ETH) as one of the leading cryptocurrencies for this market cycle, but his bold prediction quickly faced some pushback from industry experts, citing several major challenges regulations and market.
First, the SEC classified Solana as a security, a fact invoked in lawsuits against major exchanges like Coinbase and Kraken. As such, it complicates his path to approval. Unlike BTC and ETH, neither of which currently have a spot ETF but have futures ETFs, Solana does not have this crucial market infrastructure.
ETF analyst James Seyffart of Bloomberg Intelligence added that the cryptocurrency requires a Solana futures product listed on the Chicago Mercantile Exchange or a robust cryptocurrency regulatory framework from Congress before any spot ETF.
Current status and future prospects
Currently, Bitcoin and Ether are the only two cryptocurrencies with approved futures ETFs in the United States. Major ETF issuers have also expressed little interest in launching ETFs beyond the two digital assets. BlackRock, a major ETF issuer, has not declared any plans to launch ETFs for other altcoins, including Solana.
Despite these regulatory challenges, demand for a Solana ETF appears strong. Seyffart believes investor interest, outside of Bitcoin and Ether, would be huge for Solana. However, these legal obstacles could make the road very long and bumpy.
Nate Geraci, president of The ETF Store, supported Seyffart’s assessment that there probably wouldn’t be a Solana spot ETF without the futures market and clearer rules. He argued that Congress must establish a legitimate regulatory framework for cryptocurrencies before such a product has any chance of approval.
Contrary opinions
Not everyone agrees with Kelly’s prediction. Adam Cochran, partner at Cinneamhain Ventures, believes that Litecoin (LTC) or Dogecoin (DOGE) could be the next cryptocurrencies to gain ETF approval due to their simpler regulatory profiles.
Both Litecoin and Dogecoin operate under a proof-of-work consensus mechanism, similar to Bitcoin, which could make their regulatory paths less controversial.
The market climate is always fluid and the SEC’s position may change as continued regulation is issued. The decision in favor of spot Ether ETFs could be huge, perhaps paving the way for the approval of ETFs for other digital assets, including Solana.