Ethereum
Approval of Ethereum ETF will pave way for Solana ETF, commodity classification
According to a recent Bernstein report, approval of a commercial Ethereum (ETH) exchange-traded funds (ETFs) in the United States could set a precedent for classification Solana (SOL) as a commodity.
Classifying cryptocurrencies as securities or commodities has important implications. Commodity classification makes ETF applications and approvals easier, while securities classification subjects assets to stricter SEC oversight.
“Big Three”
Approving Ethereum spot ETFs would mean the SEC considers the second-largest crypto a commodity, setting a critical precedent. This would be the first time a non-Bitcoin digital asset received such a classification, raising hopes that Solana would follow suit.
The price of Ether rose earlier this week after Bloomberg analysts increased the probability of SEC approval for Ether spot ETFs from 25% to 75%, following reports that the regulator had requested updates to the filings. The SEC’s final decisions on these requests are expected later today, May 23, after multiple delays.
Bernstein’s report noted that Bitcoin Rally of 75% following the approval of Spot ETF suggests similar price action for Ethereum following approval of spot ETFs.
However, if the SEC rejects the requests, Ethereum could experience significant volatility and a sharp price correction in the coming days, according to the CryptoQuant study.
Crypto investor Brian Kelly expressed similar optimistic opinions about Solana and the potential regulatory approval of Ethereum ETF products during a recent interview with CNBC. He speculated that SOL could be the next altcoin to receive ETF approval, highlighting it as a likely candidate that investment managers should advance.
Kelly highlighted that Bitcoin, Ethereum and Solana are the “big three” digital assets that could see ETF products approved during this cycle. He highlighted the success of Bitcoin ETFs, which have collectively accumulated a significant amount of Bitcoin, valued at approximately $58 billion, indicating strong demand for regulated crypto investment products.
However, Kelly also acknowledged some skepticism within the Solana community. He mentioned that Solana’s initial coin offering (ICO) and its classification as a security by the SEC could pose problems for ETF approval.
Despite this, Kelly remains optimistic that the evolving regulatory and political landscape could increase the Solana ETF’s chances of approval if Ethereum ETFs receive the green light.
A changing political landscape
The Bernstein report, released ahead of the SEC’s final rulings on ETH ETF applications, also highlighted a potential shift in the Biden administration’s stance on cryptocurrencies based on recent developments.
Additionally, the report states that if Trump is re-elected, his administration will likely further support the crypto industry through legislative and regulatory measures. According to the report:
“If Trump were elected, crypto could gain significant legislative and institutional support, leading to lasting structural changes in crypto financial integration.”
Potential approval of Solana ETFs comes amid changing and growing regulatory environment bipartisan support for cryptography. The recent passage of Financial innovation and technology for the 21st century (FIT21) Legislation passed by the House, with significant Democratic support, signals a potential policy shift.
Attorney Jake Chervinsky described the bill’s passage as a “vote of no confidence” in the SEC’s current approach to crypto regulation, suggesting political consequences for maintaining an anti-crypto stance.
Regulatory approval of Solana ETFs would mark a significant milestone for the crypto industry, signaling mainstream acceptance and mainstreaming. However, with Ether ETFs still awaiting approval, the industry remains cautiously optimistic about the future.