Market Expert Explains Why Election Outcome Is Key For Solana And XRP ETFs

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As a seasoned analyst with over two decades of experience navigating the complexities of the financial sector, I find myself intrigued by Nate Geraci’s perspective on the upcoming election and its potential impact on crypto ETFs. His insights into the differing approaches that a Kamala Harris or Donald Trump administration might take towards cryptocurrencies are particularly insightful.

As an analyst, I’m sharing insights based on the perspective of Nate Geraci, President of The ETF Institute. The upcoming election could significantly shape the future trajectory of crypto ETFs. Particularly intriguing is the potential approval of new spot ETFs for digital assets like Solana, XRP, and Litecoin.

As an analyst, I foresee that a potential Kamala Harris administration may continue the cautious stance on cryptocurrency adopted by the Biden administration, potentially slowing down advancements in this field. Conversely, a second Trump term could pave the way for a more welcoming crypto climate, where the pace of ETF innovation might significantly pick up speed.

Election Outcome Could Shape Future of Solana and Crypto ETFs

According to Nate Geraci, President of The ETF Institute, the form that crypto ETFs might assume could be determined following this election. Specifically, it’s anticipated that approval may be given for new spot ETFs involving assets such as Solana, XRP, and Litecoin in the future.

A continuation of an administration led by Kamala Harris, following the cautious approach of the Biden Administration, could potentially lead to a slower pace. On the other hand, a Trump administration might foster a more friendly environment that could potentially speed up innovation and approvals for Exchange-Traded Funds (ETFs).

The election outcome could have implications for the ETF industry…

3 key areas I’m watching:

1) Crypto ETFs

2) ETF Share Class Structure

3) ETF Taxation

My latest via @etfcom…

— Nate Geraci (@NateGeraci) November 5, 2024

Nate Geraci said that successful spot Bitcoin and Ether ETFs have inspired a push for new crypto products. This includes potential spot ETFs for Solana, XRP, and Litecoin. Grayscale now wants to convert its Digital Large Cap Fund into an ETF.

Apart from Bitcoin and Ether, the investment portfolio also holds tokens from Solana, XRP, and Avalanche. On the contrary, a presidency led by Kamala Harris might maintain the same cautious stance on cryptocurrencies as the current administration under President Biden. Although there’s been a clear route for Bitcoin and Ether Exchange-Traded Funds (ETFs) to be approved by the SEC, including futures-based products, no such clear path exists for other crypto assets. As a result, it remains unclear how they might proceed.

Trump, on his part, has indicated that his administration will be much friendlier toward crypto.

30+ Fund Firms, Including BlackRock, Seek SEC Approval for ETF Share Classes

Approximately thirty investment companies, such as BlackRock, Fidelity, T. Rowe Price, and John Hancock, have petitioned the SEC for an exemption. Their goal is to introduce an ETF share option within their current mutual funds. By doing so, these firms can maintain their profitable 401(k) mutual fund networks while also participating in the expanding ETF market.

Additionally, it’s worth noting that Canary Capital – an investment company specializing in cryptocurrencies – has recently submitted an application to the United States Securities and Exchange Commission (SEC) for a Solana Exchange-Traded Fund (ETF), founded by ex-co-founder of Valkyrie Funds, Steven McClurg.

Based on input from industry insiders, it’s predicted that this model has a higher chance of being endorsed by an SEC led by Republicans. If the election favors this outcome, there might be substantial expansion in ETFs around 2025. This could spark a surge in new fund launches and investments, as major asset managers rush to merge ETFs with mutual funds.

Nate Geraci expressed that the current U.S. debt, now standing at $36 trillion, has lawmakers scrambling for fresh tax revenue avenues, and ETFs might be the next potential target. This view is echoed by analyst Ran Neuner, who recently highlighted a concerning pattern in the U.S. – an escalating addiction to debt. Neuner pointed out that regardless of the upcoming significant elections, this compulsion to spend excessively will persist with no discernible effect.

Previously, Senator Ron Wyden, as Chairman of the Senate Finance Committee, proposed a bill aimed at abolishing the tax-deferral benefit associated with the in-kind redemption mechanism for Exchange-Traded Funds (ETFs).

This essential piece is what makes Exchange-Traded Funds (ETFs) highly tax-efficient. Despite this legislation not progressing, Geraci pointed out that it demonstrates the ongoing consideration of ETF taxation among certain politicians. This is significant for asset managers planning to develop ETF share classes to offer mutual funds tax advantages. Regardless of the election results, tax policies could change in various directions. The ETF industry is readying itself to adapt to any potential alterations in rules that might affect how its tax benefits are structured.

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2024-11-05 22:54