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In the early morning of May 24, Ethereum ETF reached a milestone in the United States, with the U.S. Securities and Exchange Commission approving the issuer's 19b-4 filing. As a result, discussions about whether other tokens could launch ETFs have also become popular. What challenges will be encountered in approving ETFs for other tokens? If this is possible, which tokens will be launched first? SOL, PEPE, or DOGE?

From the perspective of industry experts, consensus on tokens and whether they are defined as securities are two hard thresholds. At present, if there is no major change in the US regulatory framework, the next ETF may not be created until two or three years later.

Sol is highly anticipated, but less likely

On May 23, BKCM CEO Brian Kelly predicted on CNBC’s “Fast Money” that Solana (SOL) could be the next cryptocurrency to launch a spot exchange-traded fund (ETF) in the United States. But this bold prediction immediately received some pushback from industry experts, who pointed out several significant regulatory and market challenges.

First, the U.S. Securities and Exchange Commission (SEC) has classified Solana as a security, which has been cited in lawsuits against major exchanges such as Coinbase and Kraken. Therefore, this makes Solana's path to approval more complicated. In addition, unlike Bitcoin and Ethereum, BTC and ETH have futures ETFs, while Solana does not have this key market foundation.

Before any spot ETF can launch, Solana needs a futures product listed on the Chicago Mercantile Exchange or a strong regulatory framework for cryptocurrencies enacted by the U.S. Congress, said James Seyffart, an ETF analyst at Bloomberg.

Currently, Bitcoin and Ethereum are the only two cryptocurrencies with approved futures ETFs in the U.S. Major ETF issuers have shown little interest in launching ETFs beyond these two digital assets. BlackRock, a well-known ETF issuer, said it has no plans to launch ETFs for other alternative coins, including Solana.

Although Franklin Templeton, which manages trillions of dollars in assets, recently praised Solana and one of its founders, Anatoly Yakovenko, sparking speculation about whether the company would consider applying for a spot Solana ETF in the future, few ETF issuers have expressed any intention to apply for a spot Solana ETF.

Nate Geraci, president of the ETF Store, agreed with Seifat that without a futures market and clearer rules, there may not be a spot Solana ETF. He said Congress needs to create a legal regulatory framework for cryptocurrencies before such a product has any chance of approval.

Adam Cochran, partner at Cinneamhain Ventures, believes that Litecoin (LTC) or Dogecoin (DOGE) could be the next cryptocurrency to receive ETF approval due to their simpler regulatory situations. Both Litecoin and Dogecoin use a proof-of-work (PoW) consensus mechanism similar to Bitcoin, which could make their regulatory paths less controversial.

On May 23, Grayscale launched two new investment trusts, Grayscale Near Trust (NEAR) and Grayscale Stacks Trust (STX). Rayhaneh Sharif-Askary, Grayscale's chief product and research officer, said they are committed to launching new products that allow investors to access emerging and developing parts of the crypto ecosystem. Some believe that the movements of institutions such as Grayscale may also be a clue to the next ETF, but the current situation is unclear.

Consensus and whether it is defined as a security are hard thresholds

On May 23, the guests at the Twitter Space of "What will Ethereum spot ETF bring?" jointly organized by PANews and OKX also discussed this issue. 0xVeryBigOrange, the owner of Zero× Dry Goods Store, believes that we must first analyze from the top 10 or even the top 5 in terms of market value, that is, apart from Bitcoin and Ethereum, I think SOL is almost impossible because there are many controversial lawsuits being resolved, and BNB is also impossible. I think DOGE may have a higher probability later.

“I have also been paying attention to DOGE recently, but I still think that the probability of other tokens launching ETFs immediately is extremely low, and there is a qualitative leap between launching and not launching. As for the others, you can use it as a method of elimination, and those with small market capitalization should not be considered at all.” Big Orange added.

Ethereum ecosystem developer 0xAA @0xAA_Science holds the same view as Dachengzi, "After Ethereum, I also think that based on market value, I hope to give memes more opportunities, because fair launch memes may be the least like securities, but I don't think the United States can accept the public investing in this meme in the short term, so let's take it slow."

Mindao @mindaoyang, founder of dForce, said that several indicators were mentioned earlier, one of which is the concentration of chips. From this point of view, it is indeed in the top 20. I think it is also related to stickiness. For example, Bitcoin and Ethereum have been in the market for more than 10 years, and the chips are already very dispersed, while Solana has only been around for four or five years. In addition, the concentration of its foundation was specifically mentioned earlier, including the 10% held by FTX before. The total number of related people may not be less than 20%, so Solana is basically impossible.

There is another leading indicator for the approval of Bitcoin and Ethereum ETFs. They must be traded on the Chicago Mercantile Exchange (CME) in the United States. Because the ETF itself must refer to the price, in fact, apart from Ethereum and BTC, there are no other targets traded on it. I think there may be at least two or three years of window period, and there will not be a third one. If there is a third one, I think Dogecoin may meet this requirement, but the market value of Dogecoin is too low. I think it seems that more than 20 billion US dollars is a bit tasteless to make an ETF.

Now the dominant position of Bitcoin and Ethereum ETFs is very strong, because first of all, their narratives are completely different, and Ethereum's narrative is highly overlapping with Solana. So why do we need Solana when there is Ethereum, and why do we need other ETFs? There may not be much narrative differentiation, so at least I think that in the next two or three years, there may only be BTC and ETH as investable ETFs, and I really can't see other ETFs.

Data analyst Phyrex @Phyrex_Ni believes that this is very likely in terms of years. Secondly, I will focus on the issue of DOGE. We still need to look at the conditions for the SEC to approve spot ETFs. The first is that it must be non-securities. Let's first say that DOGE is non-securities, which may meet this requirement.

The second point is to have enough consensus. The so-called consensus refers to the market value of funds on the one hand, and on the other hand, when we see the rejection of ETFs, there are many contents involved, including market manipulation. In fact, DOGE has very obvious market manipulation. You can clearly see that whenever Elon Musk posts anything related to DOGE, he will definitely cause a market reaction, and the increase in DOGE may be relatively large. So from this aspect, it is highly market concentrated and highly market manipulated.

So from this perspective, no matter who becomes the chairman of the SEC, no matter whether FIT21 has been rejected or not, the possibility of DOGE itself passing the spot ETF is very low. This is very low, and this is also one of the reasons for its market value.

Secondly, we can look at the market value. Whether you are DOGE or anyone else, the gap is actually very large. Everyone knows that Solana is impossible. Even if Solana has reached a consensus, its biggest problem is the SEC. The SEC actually has to save face, especially now that the SEC has already made Solana a key securities target in the lawsuit against Coinbase, so the lawsuit between Solana and Solana will definitely be fought, it’s just a matter of when.

Even if Gary Gensler (SEC Chairman) is replaced this time, the relationship between Solana and Coinbase will still be sued, and BNB is unlikely. Ripple itself is possible, and XRP is actually possible, but Ripple has not actually won any SEC lawsuits. Ripple has not won at all. Ripple has only gone from losing 100 points to losing 80 points.

We see that among the overall cryptocurrencies, if they meet the criteria of being securities, then there may not be enough consensus, and if they meet the criteria of being consensus, then they may not be securities. So first of all, according to the SEC, it has officially stated that they are no longer securities. In other words, except for BTC, ETH, BCH, LTC, DOGEE, and STX, there is no other cryptocurrency that clearly states that it is not a security.

In addition, as Teacher Mindao said, you must go to CME (Chicago Mercantile Exchange) first. You haven’t even seen this layer, so it may be more difficult.

So next, even if there will be new ETFs in the future, it will only be possible after FIT21 is passed to see if the definition of the entire cryptocurrency industry will change. If this one can really be changed, then there may be new ones. Who will the new one be? Only then can we say. If the conclusion of this one has not changed, then it is very likely that the goal will be to set it annually, and it is not ruled out that all existing tokens will not meet the requirements.

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