- Solana ETFs face tough U.S. SEC market surveillance requirements, hindering rapid approval compared to Bitcoin and Ethereum.
- Limited market demand for altcoin ETFs due to low recognition outside the crypto community, unlike Bitcoin’s broad appeal.
Katalin Tischhauser, head of investment research at Sygnum Bank, recently outlined these hurdles in a detailed discussion, highlighting the stringent requirements set by the U.S. Securities and Exchange Commission (SEC).
Regulatory Challenges Impeding Approval
The SEC’s stringent market surveillance requirements stand as a significant barrier. The commission insists that cryptocurrency exchanges operate under regulations similar to traditional securities exchanges—a criterion most crypto platforms fail to meet.
This designation of crypto exchanges as “unregulated securities exchanges” makes the approval of new crypto ETFs particularly challenging.
As long as exchanges like Coinbase are not recognized as adequate surveillance markets, the likelihood of Solana or other altcoins gaining ETF approval remains slim.
Market Demand and Investor Interest
Beyond regulatory hurdles, Tischhauser predicts minimal market demand for altcoin ETFs, noting that altcoins such as Solana lack the broad recognition enjoyed by Bitcoin and, to a lesser extent, Ethereum.
“The high premium suggests some demand, but it is not the kind of demand that will have a significant impact on the market,” Tischhauser said.
While Bitcoin ETFs have seen significant inflows, amassing $17.7 billion, Ethereum’s spot ETFs have experienced a slower uptake, influenced partly by past performance issues with investment vehicles like the Grayscale Ethereum Trust.
Insights from Industry Leaders
This sentiment is echoed by industry leaders like Samara Cohen, BlackRock’s chief investment officer, who indicated that Bitcoin and Ethereum are likely to remain the primary focus of cryptocurrency ETFs in the foreseeable future.
Concerns about technical hurdles, liquidity, and the risk of market manipulation make altcoins like Solana less attractive for inclusion in ETFs.
Global Perspectives and Future Outlooks
Despite these challenges in the U.S., Europe has ventured into a variety of crypto exchange-traded products (ETPs), including single coin and basket options.
The sector might change, as noted by Matthew Sigel of VanEck during a discussion on The Wolf of All Streets Podcast.
He suggested that forthcoming regulatory adjustments could potentially broaden the U.S. market for diverse crypto ETFs.
SEC Commissioner Hester Peirce also hinted at the complexity of approving a Solana ETF, emphasizing the need for thorough regulatory deliberation and a tailored review process.
