Rob Marrocco, Vice President and Global Head of ETF Listings at Cboe, recently shared insights on the likelihood of Solana ETFs being introduced to the market in the near future. During a podcast on June 11, Marrocco expressed his belief that the current market and regulatory landscape would need to undergo significant changes before we see crypto ETFs beyond Bitcoin and Ethereum.
Marrocco highlighted that the absence of a futures market for cryptocurrencies like Solana (SOL) and XRP is a major hindrance to the approval of spot ETFs. He pointed out that the presence of a futures market played a crucial role in the approval process for spot Bitcoin and Ethereum ETFs. Without this key component, the road to introducing a Solana ETF would be considerably more challenging.
In Marrocco’s view, the most viable pathway to a Solana ETF would involve the introduction of a Solana futures ETF first. This initial step could then pave the way for the eventual approval of a spot ETF for Solana. However, he also noted that even if Solana futures ETFs were to be established, they would need to operate for a significant period to establish a reliable track record. This process could be lengthy and may require a considerable amount of time to come to fruition.
Marrocco further emphasized the time-consuming nature of the approval process, stating that it could take a substantial amount of time to reach the point where a Solana ETF becomes a reality. This sentiment underscores the complexity and challenges associated with bringing new crypto ETFs to market, particularly those that lack a futures market.
An alternative approach, as suggested by Marrocco, would involve the establishment of a comprehensive crypto regulatory framework. Such a framework would provide clarity on the classification of digital assets as securities or commodities, thereby enabling regulatory bodies like the SEC to proceed with ETF approvals more efficiently.
However, the implementation of a regulatory framework of this nature would require legislative action, which could be a time-consuming process depending on the speed and willingness of politicians. Despite the potential challenges, Marrocco and other industry experts see this as a more expedient route compared to waiting for a futures market to develop.
VettaFi editor-in-chief Lara Crigger echoed Marrocco’s sentiments, noting that the absence of a futures market for Solana could pose challenges in meeting the SEC’s criteria for approving an ETF. This lack of data may impede the process of demonstrating the market’s size and transparency, both of which are crucial considerations for regulatory approval.
While industry experts remain divided on the prospect of Solana ETFs, major financial institutions like JP Morgan, Bloomberg, and Bernstein have expressed varying levels of skepticism and optimism. Bernstein, for instance, believes that the approval of Ethereum ETFs has paved the way for tokens like Solana to potentially receive a commodity classification, hinting at a possible shift in regulatory attitudes.
The regulatory landscape in the United States is also evolving, with recent legislative developments reflecting a growing interest in regulating digital assets. The passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) on May 22 signifies a step towards creating a more robust regulatory framework for digital assets to safeguard investor interests and market integrity.
FIT21, which garnered bipartisan support in the House, aims to clarify the regulatory responsibilities of agencies like the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) concerning digital assets. By delineating jurisdiction over digital commodities and assets offered as investment contracts, the bill seeks to streamline regulatory oversight and provide clearer guidelines for market participants.
Despite these positive developments, FIT21 is currently pending a Senate vote before it can become law. The passage of this bill could have significant implications for the crypto market, potentially laying the groundwork for the introduction of new ETFs and fostering greater regulatory clarity in the digital asset space.
In conclusion, the road to introducing Solana ETFs faces significant hurdles related to the absence of a futures market and the evolving regulatory landscape. While challenges persist, the industry continues to explore alternative pathways and regulatory frameworks that could expedite the approval process for new crypto ETFs. As market participants await further developments, the future of Solana ETFs remains uncertain but subject to ongoing regulatory and market changes.
