Will XRP, Solana, and Cardano Be the Next ETFs?

Will XRP, Solana, and Cardano Be the Next ETFs?

Brad Garlinghouse, the CEO of Ripple, recently expressed his belief that XRP, Solana (SOL), and Cardano (ADA) could soon see their own exchange-traded funds (ETFs). Speaking at Consensus 2024, Garlinghouse shared his optimism in the wake of the US Securities and Exchange Commission’s (SEC) approval of spot Bitcoin (BTC) ETFs and progress on Ethereum (ETH) ETFs.

Garlinghouse’s confidence is buoyed by the SEC’s greenlighting of Bitcoin and Ethereum ETFs, which he sees as setting a precedent for more diverse crypto ETFs. He believes this move signifies increased acceptance and recognition of cryptocurrencies in the financial sector.

“I think it’s just a matter of time, and it’s inevitable there’s gonna be an XRP ETF, there’s gonna be a Solana ETF, there’s gonna be a Cardano ETF, and that’s great,” Garlinghouse remarked.

This perspective is consistent with Garlinghouse’s earlier statements. In February, he suggested that the approval of Bitcoin ETFs marked the beginning of broader acceptance for crypto ETFs, potentially aiding in portfolio diversification and risk reduction.

Other industry experts echo Garlinghouse’s enthusiasm, though opinions vary on which cryptocurrencies might be next. Brian Kelly, CEO of digital currency investment firm BKCM, recently suggested that the approval of spot Ethereum ETFs could lead to more crypto ETFs, including Solana.

However, the path to an XRP ETF is not without obstacles. Ripple’s ongoing legal battle with the SEC raises doubts about its immediate viability. Joe McCann, CEO of crypto investment firm Asymmetric, highlighted these challenges.

“I’m a big Solana bull. […] I think Solana will be next [for ETFs]. Granted, there is some language in the Coinbase lawsuit that could impact that, but it seems unlikely. If you look at XRP, there is some history with the SEC. So, I don’t know if it is going to be the ETF that comes next,” McCann commented.

McCann also noted significant interest from the traditional finance (TradFi) sector in Solana, driven by its potential and favorable price action. This interest, particularly from those who missed out on Ethereum’s growth cycles, reinforces his belief that Solana is a strong candidate for the next ETF.

Regulatory Hurdles and Skepticism Surround Future Crypto ETFs

Despite these positive signals, some remain cautious. Nikolaos Panigirtzoglou, Managing Director and Global Market Strategist at JPMorgan, expressed skepticism about the SEC approving crypto ETFs beyond Bitcoin and Ethereum.

“We doubt. The decision by the SEC to approve ETH ETFs is already stretched given the ambiguity about whether Ethereum should be classified as a security or not. We don’t think the SEC would go even further by approving Solana or other token ETFs given the SEC has stronger (relative to Ethereum) opinion that tokens outside Bitcoin and Ethereum should be classified as securities,” Panigirtzoglou stated.

Panigirtzoglou added that legislative changes might be necessary for broader ETF approvals. If US policymakers pass laws clarifying that most cryptocurrencies are not securities, the SEC might be more inclined to approve other crypto ETFs. However, such regulations are yet to be established.

Felix Mohr’s Perspective on Crypto ETFs and Legal Strategies

Felix Mohr, Managing Partner at MohrWolfe, echoes the optimism about the future of crypto ETFs, emphasizing the critical need for robust legal strategies for companies venturing into blockchain-based financial products. He points out the substantial legal resources required, especially in the US, to navigate the regulatory landscape.

“Perhaps a more prudent path would be to build products around Bitcoin’s blockchain, given the clarity regarding its status as either a commodity or security,” Mohr told BeInCrypto.

The recent approval of spot Ethereum ETFs has revitalized the crypto market, though the final steps in the process are still underway. Potential issuers are awaiting the SEC’s final approval before these products can begin trading.

Ethereum ETFs are particularly intriguing due to Ethereum’s Proof-of-Stake (PoS) mechanism, which enables validators to earn staking rewards. Initially, companies applying to issue these ETFs included staking features in their applications. However, the SEC requested revisions to the 19-4b and S-1 documents to exclude these features. After preliminary approval, firms like VanEck and BlackRock have already updated their S-1 filings accordingly.

As the regulatory landscape continues to evolve, the potential for new crypto ETFs remains a subject of keen interest and speculation within the industry.