Approval of the Ethereum ETF will set the stage for the Solana ETF, a product classification.
Approval of a U.S. spot Ethereum (ETH) exchange-traded fund (ETF) could set a precedent for Solana (SOL) to be classified as a commodity, according to a recent Bernstein report.
Classifying cryptocurrencies as securities or commodities has important implications. Product classification facilitates ETF application and approval, while security classification subjects assets to more stringent SEC oversight.
‘Big 3’
Approval of the spot Ethereum ETF marks the SEC’s decision to consider the second-largest cryptocurrency as a commodity, setting an important precedent. This is the first time a digital asset other than Bitcoin has received this classification, raising expectations that Solana will follow suit.
The price of Ether rose earlier this week after Bloomberg analysts reported that the regulator had requested a filing update after the SEC raised the odds of approval for a spot Ether ETF from 25% to 75%. The SEC’s final decision on these applications is expected later today, May 23, after several delays.
Bernstein’s report points out that Bitcoin’s 75% rise following the approval of a spot ETF suggests similar price action for Ethereum following the approval of a spot ETF.
However, if the SEC rejects the application, Ethereum could experience significant volatility and sharp price corrections over the next few days, according to CryptoQuant research.
Crypto investor Brian Kelly expressed similar optimism about potential regulatory approval of Solana and its Ethereum ETF product in a recent CNBC interview. He speculated that SOL could be the next altcoin to receive ETF approval, highlighting it as a likely candidate for investment managers to pursue.
Kelly emphasized that Bitcoin, Ethereum, and Solana are the “big three” digital assets for which ETF products could be approved this cycle. He noted the success of Bitcoin ETFs, which have collectively accumulated a significant amount of Bitcoin worth about $58 billion, indicating strong demand for regulated cryptocurrency investment products.
But Kelly also acknowledged some skepticism within the Solana community. He noted that Solana’s ICO and the SEC’s securities classification could pose challenges for ETF approval.
Nonetheless, Kelly was optimistic that if the Ethereum ETF receives approval, changes in the regulatory and political environment could increase the likelihood of Solana ETF approval.
change in political landscape
The Bernstein report, released ahead of the SEC’s final decision on the ETH ETF application, highlighted a possible shift in the Biden administration’s stance on cryptocurrencies based on recent developments.
The report also notes that if Trump is re-elected, his administration is likely to further support the cryptocurrency industry through legislative and regulatory actions. according to the report:
“If Trump is elected, cryptocurrencies will receive significant legislative and institutional support, which could lead to long-term structural changes in cryptocurrency financial inclusion.”
The potential approval of the Solana ETF comes amid a changing regulatory environment and growing bipartisan support for cryptocurrencies. The recent passage of the Financial Innovation and Technology for the 21st Century (FIT21) Act in the House of Representatives, with significant Democratic support, represents a potential political shift.
Attorney Jake Chervinsky described the bill’s passage as a “vote of no confidence” in the SEC’s current approach to cryptocurrency regulation, suggesting there will be political consequences for maintaining its anti-crypto stance. .
Regulatory approval of the Solana ETF will be a significant milestone for the cryptocurrency industry and signify mainstream acceptance and integration. However, with the Ether ETF still awaiting approval, the industry is cautiously optimistic about the future.
