Recognition of SOL as a security may put an end to ETF prospects / Massmedia / Vladimir Okhotnikov

Recognition of SOL as a security may put an end to ETF prospects

28 May 2024

SEC Opens Pandora's Box: Spot ETH Acceptance 


The approval of ETFs for SOL and XRP will open a new page in the history of the crypto industry and will mark the beginning of a long process of integrating altcoins into traditional financial instruments. However, for now this looks like an overly optimistic and even naive forecast. One should not ignore the fact that the launch of such products is associated with a huge number of regulatory and legal difficulties that are unlikely to be overcome quickly.

A possible decision by the SEC to recognize the SOL token as a security will only confirm these fears. The Commission has already made it clear that it is not going to tolerate violations of securities laws and will suppress attempts to circumvent existing rules. And the comparison with the situation around Ethereum is incorrect, since ETH has a much more mature and decentralized ecosystem than SOL or XRP.

In light of this, Cardano CEO Charles Hoskinson’s opinion about Bitcoin looks far-fetched. Perhaps Hoskinson is pursuing his own benefit, since his project can also claim to launch an ETF, so he is trying to present the news as some kind of ultimate truth. At the same time, it is completely overlooked that many experts characterize Cardano as a rather controversial and ambiguous project. 

The net money inflows have been observed in BTC-ETF already for 10 days in a row

The net money inflows have been observed in BTC-ETF already for 10 days in a row


It is believed that fears about the depreciation of ETFs in the event of their mass launch on various altcoins do not seem so far-fetched. But a much greater threat is the potential decline in confidence in cryptocurrencies in general due to the increasing frequency of scandals around individual projects and general market instability.

In addition, there is an opinion that the crypto industry is not yet able to solve fundamental problems with security, scalability and regulation. And this may turn off institutional investors due to the large selection of investment instruments.

Speculation has been launched about what criteria projects must meet to earn regulatory approval, which sounds reasonable. On the one hand, this is a set of rather general and banal recommendations, following which in itself does not guarantee success. On the other hand, this will help establish a constructive dialogue between the industry and regulators and develop clear and understandable rules of the game. But this task is more complex than simply asking projects to be more open and transparent.

The lack of a clear and coherent position from the SEC is alarming. By and large, all the attempts of the Regulator turn out to be a farce - wishful thinking, without bothering with a serious analysis of the real state of affairs, is the prerogative of Gary Gensler.

Instead of making predictions about the launch of altcoin ETFs in the distant future, we should focus on the immediate problems of the crypto industry that require immediate solutions.

It is necessary not to build castles in the air, but to work to increase the maturity and reliability of existing projects, look for opportunities for the real application of blockchain technologies, and establish a dialogue with regulators. This is the only way to earn the trust of institutional investors and the general public.