The Securities and Exchange Commission (SEC) approved a Bitcoin spot exchange-traded fund (ETF) earlier this year, which attracted the attention of investors. Capital inflows into these funds caused Bitcoin’s value to rise rapidly, soon reaching an all-time high and breaking a long period of stagnation in the crypto market.
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A few months later, financial watchdogs approved the EtherSpot ETF, and many analysts predict it could garner even more interest from investors. This optimism stems from the widespread application of the Ethereum blockchain, especially in decentralized finance (DeFi) and decentralized applications (dApps).
Now, the conversation among investors has shifted to: Will the SEC continue to expand the scope of crypto ETFs? Two promising candidates for future ETFs are Solana and XRP. Below, we explore what these potential products mean for the market.
Solana and Solana ETF: What is it?
Founded in 2017, Solana is a high-performance blockchain network designed to support dApps. Known for its speed, Solana can process transactions significantly faster than other blockchains such as Ethereum. Ethereum processes around 12-15 transactions per second, while Solana claims to support up to 50,000 transactions per second, making it one of the fastest blockchain networks in the space. Additionally, Solana offers lower transaction fees, making it more attractive to developers and users.
Thanks to its speed and cost efficiency, Solana has earned a reputation as a strong competitor to Ethereum. Solana is often referred to as the “Ethereum killer.” Its native token, Solana (SOL), plays a key role in securing the network and rewarding participants. As of early October, it was trading at $137, an increase of nearly 500% compared to last year’s price of $23.
If approved, the Solana ETF will be an exchange-traded fund that tracks the price of SOL, offering investors a way to gain exposure to the Solana ecosystem without having to directly buy and hold SOL tokens. . This will allow traditional investors to benefit from Solana’s growth potential through a more accessible investment vehicle.
XRP and XRP ETF: what is it?
XRP is the native token of the open-source blockchain, the XRP Ledger. It is used by the Ripple payment network to facilitate cross-border transactions and is designed to act as a bridge currency. It is important to note that although Ripple operates the network, it does not own XRP. Unlike Bitcoin, which has a supply cap of 21 million coins, XRP has a total supply of 100 billion tokens. It is currently trading at $0.52, down 3% from a year ago.
If the XRP ETF receives approval from the SEC, it will track the price of XRP and provide investors with a way to gain exposure to the XRP ecosystem without having to directly buy and hold XRP tokens.
Will Solana and XRP Spot ETFs be approved?
The SEC has previously taken a cautious approach to crypto ETFs, prioritizing investor protection and regulatory compliance. However, the recent approval of the Bitcoin Spot ETF has paved the way for other cryptocurrencies such as Solana and XRP to follow suit.
Earlier this week, crypto asset management company Bitwise filed for its first spot XRP ETF. Similarly, investment management firm VanEck filed an application to list the first U.S. Solana Spot ETF earlier this year. In addition, asset management company 21Shares has also applied for a spot Solana exchange, which will be the second large-scale application of its kind in 2024.
Several Solana-linked investment products are currently available, including Grayscale’s Solana Trust (GSOL) and VanEck’s Solana ETP (VSOL), which can be accessed in some regions.
There is widespread optimism in the market that a new crypto ETF could be given the green light within this year or next. This change could expand investment opportunities in the crypto space and attract a wider range of institutional and individual investors.
As the situation evolves, the SEC’s decisions will be closely monitored to determine how it plans to regulate this new asset class.
