As an analyst with a background in blockchain and cryptocurrency research, I find VanEck’s decision to file for a Solana-based ETF rather than one based on XRP intriguing. Based on the interview with Matthew Sigel, it seems that the comparable blockchain characteristics and decentralized nature of Solana have influenced VanEck’s filing strategy.
As a researcher, I had the opportunity to listen in on an engaging conversation between Tony Edwards of Thinking Crypto and Matthew Sigel, VanEck’s Head of Digital Assets Research. In this discussion, Matthew shared insights into VanEck’s rationale for pursuing a Solana-based Exchange Traded Fund (ETF) instead of one centered around XRP.
Solana Is Like Ethereum
As a crypto investor, I’ve closely observed the similarities between Solana and Ethereum from a technical and regulatory perspective, which influenced VanEck’s investment strategy. When examining our Ethereum filing, I carefully analyzed the language regarding decentralization and the unique traits of the blockchain. After taking a fresh look at Solana, I came to the conclusion that the Ethereum (ETH) and Solana (SOL) assets share the same fundamental characteristics – no single entity holds more than 20% of the outstanding supply for either, and neither can unilaterally halt their respective chains.
As a crypto investor, I can’t stress enough the significance of decentralization in the crypto world. The SEC has repeatedly emphasized this aspect when evaluating cryptocurrencies. By bringing Solana closer to Ethereum in terms of decentralization, VanEck aims to present the Solana ETF as a comparable commodity to Ethereum in the perspective of regulators.
In the absence of a substantial regulated futures market for Solana, which is frequently cited as a necessity for ETF approval, Sigel remains hopeful by drawing parallels with other markets. He believes that the emphasis on having a large and regulated futures market may not be as crucial as it seems. He explained, “In truth, we believe that the importance of such a regulated market of substantial size—the Futures Market—is being overstated. There are several ETFs in existence that do not have a futures market of significant consequence like those for power, shipping, and uranium. In these markets, the futures market holds little influence on price determination.”
Sigel proposed that these previous instances could serve as a foundation for the creation of a Solana Exchange-Traded Fund (ETF). However, he acknowledged that securing approval could be more feasible under a new SEC chairman, implying possible regulatory shifts following the US elections.
Sigel added some insights about the larger regulatory landscape, focusing on the ongoing disputes between the SEC and several crypto firms, including Coinbase and Ripple. He characterized this scenario as “conflicting” or “contradictory,” reflecting the disparate outcomes from recent court rulings.
As a crypto market analyst, I’ve been following the recent court rulings closely. The federal judges have determined that secondary sales of digital assets like XRP and BNB do not fall under the Howey test and are therefore not considered securities transactions. These rulings hold significant weight for ongoing legal battles, such as the Coinbase case. I believe these precedents could potentially sway the outcomes in favor of those defending the sale and use of crypto assets.
Why No Spot XRP ETF?
Sigel expressed caution when asked about the possibility of introducing an ETF backed by XRP. He highlighted the intricate process involved in bringing new crypto ETFs to market, involving multiple levels of consideration.
To launch a new Exchange-Traded Fund (ETF), it’s essential to gain support from various key players, according to Sigel. He stressed the importance of securing agreement among regulatory bodies, issuers, market infrastructure providers, and ultimate consumers. Additionally, obtaining backing from counterparties such as exchanges, market makers, and custodians is crucial. Lastly, finding buyers for the asset completes the necessary steps to bring it to market.
As an analyst, I’ve identified notable challenges for XRP in two crucial aspects: internal endorsement and market demand. In my perspective, the likelihood of overcoming these hurdles is somewhat slim with regard to internal conviction and customer demand. Therefore, it seems less probable that we’ll see significant advancements in these areas for XRP.
Moving forward, Sigel hinted at expansive goals for crypto Exchange-Traded Funds (ETFs), drawing attention to VanEck’s current offerings in Europe. “In our European ETF selection,” he stated, “we have a leading crypto product that encompasses the top five digital assets and another for smart contract leaders, which represents the top five layer-one platforms.” This implies a potential strategy for launching comparable products in the US, subject to regulatory clearance and favorable market circumstances.
“It really is going to require clarity around first and foremost that the SOL ETF. Can we get it to the market and then I think issuers will try with the other proof of stake coins and then, you know, the building blocks will be put together and someone will do a top 5 [or] top 3 [ETF].
At press time, SOL traded at $142.
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2024-07-10 20:42