Crypto: XRP Is Not Ready For An ETF, But Solana Is!

Crypto ETF discussions and speculation continue to attract investors’ attention. The SEC’s recent approval of eight Ethereum ETFs has reignited the debate over the possibility of ETFs for other cryptocurrencies like Ripple’s XRP and Solana’s SOL. While this is a positive development, challenges remain for some cryptos.

The rocky road to an XRP ETF

Matthew Sigel, director of digital asset research at VanEck, recently discussed the prospects of an XRP ETF during a talk on the Thinking Crypto podcast. According to Sigel, creating an ETF requires approval from multiple stakeholders: the regulator must approve the underlying asset, the issuer must have confidence in the asset’s value, and there must be support from counterparties like exchanges, market makers, and custodians. Currently, XRP does not meet these criteria due to a lack of customer demand and internal conviction.

Matthew Sigel stressed the importance of these elements stating that without strong support from key market participants and clear demand from investors, the establishment of an XRP ETF remains unlikely in the short term. These obstacles therefore hamper the possibility of regulatory approval for XRP.

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Solana ticks all the boxes

Conversely, Solana appears well-positioned for an ETF. Matthew Sigel explained that when they were reviewing their Ethereum case, they also re-evaluated Solana. They looked at the decentralization and blockchain features, noting that Solana, like Ethereum, does not allow any individual or entity to control more than 20% of the tokens in circulation, nor does it allow any one entity to unilaterally shut down the chain. These elements of decentralization and security make Solana a potential ETF candidate.

Matthew Sigel also noted that Solana is considered a commodity, offering access to the second-largest open-source app store. This feature adds to optimism about future regulatory approval for a Solana ETF. The analyst is confident that regulators will eventually recognize these strengths and approve Solana-based derivatives.

The recent approval of Ethereum ETFs by the SEC has opened up new opportunities for cryptocurrencies. While XRP still has several hurdles to overcome before seeing an ETF approval, Solana already seems to meet all the necessary requirements. Investors are now eagerly awaiting the next decisions from regulators, hoping that Solana will become one of the next cryptos to receive an ETF.

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