According to a recent report by Bernstein, the approval of a spot ethereum (eth) exchange-traded fund (ETF) in the US may set a precedent for classifying Solana (SOL) as a commodity.
The classification of cryptocurrencies as securities or commodities has important implications. Commodity classification facilitates ETF applications and approvals, while securities classification subjects assets to stricter SEC oversight.
'Big Three'
Approval of ethereum spot ETFs would mean the SEC considers the second-largest cryptocurrency a commodity, setting a critical precedent. This would be the first time a digital asset other than bitcoin has received such a classification, raising expectations that Solana will do the same.
Ether price surged earlier this week after Bloomberg analysts raised the probability of SEC approval for Ether spot ETFs from 25% to 75%, following reports that the regulator requested updates of the presentations. Final SEC decisions on these applications are expected today, May 23, after multiple delays.
Bernstein's report noted that bitcoin's 75% rally following the approval of spot ETFs suggests similar price action for ethereum following the approval of spot ETFs.
However, if the SEC rejects the requests, ethereum could experience significant volatility and a sharp price correction in the coming days, according to CryptoQuant research.
Cryptocurrency investor Brian Kelly expressed similar optimistic views on Solana and the potential regulatory approval of ethereum ETF products during a recent interview with CNBC. He speculated that SOL could be the next altcoin to receive ETF approval, highlighting it as a likely candidate for investment managers moving forward.
Kelly emphasized that bitcoin, ethereum, and Solana are the “big three” digital assets that could see ETF products approved this cycle. She highlighted the success of bitcoin ETFs, which together have accumulated a significant amount of bitcoin, valued at around $58 billion, indicating strong demand for regulated crypto investment products.
However, Kelly also acknowledged some skepticism within the Solana community. She mentioned that Solana's initial coin offering (ICO) and its classification as a security by the SEC could pose challenges to ETF approval.
Despite this, Kelly remained optimistic that the changing regulatory and political landscape could increase the Solana ETF's chances of approval if ethereum ETFs receive 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 events.
Additionally, the report noted that if Trump is re-elected, his administration is likely to further support the crypto industry through legislative and regulatory measures. According to the report:
“If Trump is elected, cryptocurrencies could receive significant legislative and agency support, leading to lasting structural changes in crypto-financial integration.”
The potential approval of Solana ETFs comes amid a changing regulatory environment and growing bipartisan support for cryptocurrencies. The House's recent passage of the Financial Innovation and technology for the 21st Century (FIT21) Act, with significant Democratic support, signals a potential policy shift.
Attorney Jake Chervinsky described the bill's passage as a “vote of no confidence” in the SEC's current approach to cryptocurrency regulation, suggesting political consequences for maintaining an anti-crypto stance.
Regulatory approval of Solana ETFs would mark a major milestone for the crypto industry, signaling widespread acceptance and integration. However, with Ether ETFs still awaiting approval, the industry remains cautiously optimistic about the future.
