The SEC is expected to greenlight Litecoin ETFs ahead of XRP and Solana due to fewer legal complexities surrounding its status.
XRP and Solana ETFs face hurdles as their securities status remains unresolved, prolonging regulatory approvals for spot ETFs.
Pro-crypto leadership changes at the SEC may pave the way for more ETFs in 2024, starting with Bitcoin and Ethereum combinations.
Eric Balchunas, a renowned ETF analyst, has suggested that the approval of an XRP-based exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) may not happen soon. Balchunas believes the SEC might prioritize approving a Litecoin ETF instead, given its less contentious legal status compared to XRP.
https://twitter.com/EricBalchunas/status/1869064627591496170
SEC Signals Intent to Reject Solana ETFs
Earlier this month, the SEC reportedly informed at least two issuers of its intent to reject filings for spot Solana ETFs. This development indicates the regulatory body's cautious stance on cryptocurrencies labeled as securities, a category that includes XRP and Solana.
Unlike XRP and Solana, Litecoin (LTC) and Hedera (HBAR) have not been classified as securities by the SEC. This distinction significantly simplifies the approval process for ETFs based on these assets. Balchunas noted that Litecoin, being a Bitcoin fork and therefore categorized as a commodity, has a clearer regulatory pathway.
Anticipated Changes in SEC Leadership
The SEC is anticipated to adopt a more crypto-friendly approach next year, as pro-crypto libertarian Paul Atkins is set to replace current SEC Chair Gary Gensler. However, Balchunas cautioned that this leadership shift does not guarantee immediate approvals for XRP or Solana ETFs.
Balchunas also highlighted uncertainty regarding investor interest in newly proposed cryptocurrency ETFs. Canary Capital, one of the firms filing for these products, might face challenges in garnering sufficient demand for its offerings.
According to the analyst, the first wave of cryptocurrency ETFs is likely to focus on Bitcoin and Ethereum combinations. Litecoin and Hedera ETFs could follow due to their less complex regulatory considerations. Meanwhile, XRP and Solana ETFs may have to wait until their legal uncertainties are resolved.
