2024 U.S. Election Outcomes Could Determine Future of Altcoin ETFs, with Solana in Spotlight
Summary:
The introduction of another altcoin ETF in the U.S. might hinge on political outcomes of the 2024 presidential election. Despite the SEC approving listings for Ether ETFs, there remain hurdles. Ophelia Snyder of 21.co placed an emphasis on managing expectations for new altcoin ETFs. Yet, given the continued demand from institutional investors, there's speculation for more crypto ETFs. The next potential candidate is Solana, which despite being attractive for its high market capitalization, faces potential regulation challenges over its centralization. However, the results of the upcoming elections could be pivotal in creating a more crypto-friendly regulatory environment, paving the path for altcoin ETFs.
The chance of the U.S. introducing another altcoin ETF hinges on political shifts in the wake of the imminent 2024 U.S. presidential race. Despite the SEC approving fund managers to list Ether (ETH) ETFs as of May 23, the unveiling of these ETFs, admitted SEC Chair Gary Gensler, would take some time. Meanwhile, ripple effects concerning the next crypto ETF have already begun to form, with Solana (SOL), featuring prominently in these discussions.
Even as enthusiasm for future crypto ETFs swells, Ophelia Snyder, co-founder and president of 21.co, counseled keeping expectations for novel altcoin ETFs in check. She added that the sanction for ETH is not likely to trigger a cascade of approvals. Despite that, the popularity of spot Bitcoin (BTC) and Ether ETFs among institutional investors could drive ETF issuers to submit applications. April's CoinShares document indicated an uptick in altcoin holdings by hedge fund managers and wealth advisors, particularly in Solana.
Snyder drew attention to substantial interest in the European Solana ETP from 21.co, which manages around $990 million in assets. Nevertheless, barring potential political shifts, the journey of an altcoin ETF to gain SEC approval may be an uphill battle. However, future elections could stimulate approvals for altcoin ETFs. As it stands, U.S. regulators are stricter when compared to their global counterparts, notes Snyder, with U.S. agencies tending to disregard rulings made by overseas atuhorities.
With the current batch of U.S. regulatory leaders, an altcoin ETF is unlikely unless the cryptocurrency has active futures trading on the CME. As there are no futures altcoin ETFs listed in the U.S. currently, a spot altcoin ETF may not emerge anytime soon. This could change, however, if the U.S. elections yield an administration that strongly supports cryptocurrencies.
Whatever election result 2024 holds will significantly shape the trajectory for altcoin ETFs. A renewed pro-crypto stance, which has been suggested by Donald Trump, could grease the wheels for other coins to debut as ETFs. This could even set the stage for a new SEC commissioner to alter the pathway for spot ETF approval that the past few years have laid down. An altcoin ETF in the U.S. hinges heavily on the outcome of the 2024 presidential race.
To secure ETF approval, an asset usually has to display robust liquidity, decentralization, resistance to price manipulation, and ideally, a clear classification from regulatory bodies. These conditions may pose challenges to altcoins.
For instance, smaller market caps of altcoins compared to Bitcoin and Ether could make them vulnerable to price manipulation. Also, low liquidity in altcoin markets due to their smaller trading volumes could pose another challenge. Yet, despite these hurdles, there could be ways to make an altcoin ETF a reality. For example, ETFs could be created from a bundle of altcoins.
Still, Snyder conveys that single-asset trackers currently trump bundles of altcoins in terms of demand. Likewise, a Solana ETF, despite its impressive market capitalization, may face challenges such as centralization. Furthermore, the SEC – assuming that it remains under the same leadership post-elections – will need to address the fact that it has previously tagged Solana as a security before any ETF could be given the green light.
In summary, while the notion of a Solana ETF seems promising, like other altcoins, it and others like it may first need to reinforce their fundamentals to meet stringent U.S. regulatory requirements to become a viable option as an ETF.
Published At
6/7/2024 4:50:00 PM
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