Solana Congestion Issues Poked As CME Puts Out SOL ETF Hopes

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As a seasoned crypto investor with a deep understanding of the market, I’ve learned to take rumors and speculations with a grain of salt. The recent buzz surrounding possible Solana futures and ETFs from CME and other financial giants like BlackRock was an exciting development that had many in the community hopeful for potential gains. However, the confirmation that CME has no plans for Solana futures was a disappointing blow to those who were counting on it as a near-term catalyst.

There were whispers in financial circles that the Chicago Mercantile Exchange (CME) might soon introduce Solana (SOL) futures contracts. Additionally, it was hinted that institutions like BlackRock could be considering creating Solana-backed exchange-traded funds (ETFs).

As a researcher uncovering information about CME and Solana, I’ve learned that CME currently doesn’t intend to establish a futures fund for Solana. Consequently, the prospects of a Solana Exchange-Traded Fund (ETF) being launched in the immediate future have been diminished due to this disclosure.

CME Puts Out SOL ETF Hopes

In contrast to the widespread anticipation, CME Group has announced its decision not to develop a futures product based on Solana at this time. This prudent move aligns with the ongoing evaluations prevalent in the cryptocurrency derivatives sector. According to James Seyffart, an ETF analyst at Bloomberg, it may take several years before a Solana ETF materializes due to the intricate regulatory landscape of the US.

CME HAS NO PLANS TO OFFER SOLANA FUTURES: PERSON FAMILIAR
— db (@tier10k) May 29, 2024

This type of ETF necessitates a regulated futures market overseen by the Commodity Futures Trading Commission (CFTC). Such a market can be established through legislative actions like the FIT21 bill.

As a crypto investor, I’ve noticed that Seyffart brought up an important point regarding the SEC’s stance on Solana. Unlike my investment in Ethereum, which hasn’t been definitively labeled as a security by the SEC, Solana has been identified as such in the lawsuits against Coinbase and Kraken. This classification presents a significant hurdle when it comes to creating an ETF based on Solana.

Justin Bons Hints Reason Behind Solana Congestion

As an analyst, I’ve examined Solana’s operational issues from the perspective of Cyber Capital’s Justin Bons. Contrary to some perceptions, Bons believes that Solana’s transactions run smoothly and efficiently based on his testing experience. He debunked the notion that the network is excessively unreliable due to traffic congestion.

5/5) Seriously question any influencer who tells you that SOL is unreliable now
They are either misleading you or are completely ignorant of the true state of SOL
Solana is not perfect; no blockchain is
I am at least thankful that I can cheaply & reliably transact on SOL today
— Justin Bons (@Justin_Bons) May 29, 2024

He identified the cause of the numerous unsuccessful attempts as bot-generated spam, which the network effectively categorized as failures.

As a researcher, I’ve come across conflicting views regarding the possibility of a Solana-based spot Exchange-Traded Fund (ETF) in the US. Brian Kelly, CEO of BKCM, is among those who believe that Solana could be the next crypto asset to be adopted for an ETF following Ethereum. However, Nate Geraci from The ETF Store holds a different perspective. According to him, the introduction of a Solana spot ETF hinges on the availability of Solana futures contracts on the Chicago Mercantile Exchange (CME) or the establishment of clearer regulations governing cryptocurrencies.

Is the Regulatory Environment Favourable?

The legal structure plays a crucial role in the formation and endorsement of crypto Exchange-Traded Funds (ETFs). With the recent approval of the FIT21 bill in the House of Representatives, the Commodity Futures Trading Commission (CFTC) is granted the authority to classify certain alternative coins as commodities. This classification could pave the way for opportunities in the crypto market, such as Solana, if the Securities and Exchange Commission (SEC) were to reconsider its stance on the categorization of specific cryptocurrencies as securities rather than commodities. However, at present, the SEC’s designation of Solana as a security remains an obstacle.

Despite the predictions of a Standard Chartered Bank analyst, Geoffrey Kendrick, it is anticipated that the Securities and Exchange Commission (SEC) could give its approval for exchange-traded funds (ETFs) based on Solana and Ripple‘s XRP by the year 2025.

As an analyst, I believe this prediction stems from the recent approval of Ethereum spot ETFs in the US, which could be a sign of shifting regulatory perspectives. Kendrick’s viewpoint adds weight to this notion, as he emphasizes the importance of cryptocurrency endorsement at the political level in shaping future moves.

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2024-05-30 01:02