According to a recent report from Bernstein, the approval of a spot Ethereum (ETH) exchange-traded fund (ETF) in the US could set a precedent for the classification of Solana (SOL) as a commodity.
The classification of cryptocurrencies as securities or commodities has significant implications. Commodity classification facilitates ETF applications and approvals, while security classification subjects assets to stricter SEC oversight.
‘Big three’
The approval of spot Ethereum ETFs would mean the SEC considers the second-largest cryptocurrency a commodity, setting a crucial precedent. This would be the first time a non-Bitcoin digital asset has received such a classification, raising expectations that Solana will follow suit.
Ether’s price rose earlier this week after Bloomberg analysts raised the odds of SEC approval for spot Ether ETFs from 25% to 75%, following reports that the regulator had requested regulatory updates. The SEC’s final decisions on these filings are expected later today, May 23, after multiple delays.
Bernstein’s report noted that Bitcoin’s 75% rally following the adoption of spot ETFs suggests similar price action for Ethereum following the adoption of spot ETFs.
However, if the SEC rejects the applications, Ethereum could face significant volatility and a steep price correction in the coming days, according to research from CryptoQuant.
Crypto investor Brian Kelly expressed similarly optimistic views about Solana and the potential regulatory approval of Ethereum ETF products during a recent CNBC interview. He speculated that SOL could be the next altcoin to gain ETF approval, highlighting that it is a likely candidate for investment managers to move forward.
Kelly highlighted that Bitcoin, Ethereum and Solana are the “big three” digital assets for which ETF products may be approved in this cycle. He noted the success of Bitcoin ETFs, which have collectively amassed a significant amount of Bitcoin, valued at approximately $58 billion, indicating strong demand for regulated crypto investment products.
However, Kelly also acknowledged some skepticism within the Solana community. He said Solana’s initial coin offering (ICO) and its classification as a security by the SEC could pose challenges for ETF approval.
Still, Kelly remained optimistic that the changing regulatory and political landscape could increase Solana ETFs’ chances of approval if Ethereum ETFs are given the green light.
Changing political landscape
The Bernstein report, released ahead of the SEC’s final decisions on ETH ETF applications, also highlighted a possible shift in the Biden administration’s stance on cryptocurrencies based on recent developments.
Furthermore, the report noted that if Trump is re-elected, his administration will likely further support the crypto industry through legislative and regulatory measures. According to the report:
“Should Trump be elected, crypto could gain significant legislative and agency support, leading to long-lasting structural changes in the financial inclusion of crypto.”
The potential approval of Solana ETFs comes amid a changing regulatory environment and growing bipartisan support for crypto. The recent passage of the Financial Innovation and Technology for the 21st Century (FIT21) Act by the House of Representatives, with significant Democratic support, signals a potential political shift.
Attorney Jake Chervinsky described the bill’s passage as a “vote of no confidence” in the SEC’s current approach to crypto regulation, and suggested political consequences for maintaining an anti-crypto stance.
Regulatory approval of Solana ETFs would mark a major milestone for the crypto industry, signaling mainstream adoption and integration. However, with Ether ETFs still pending approval, the industry remains cautiously optimistic about the future.