After Bitcoin and Ethereum spot ETFs were approved for trading in the United States, multiple fund providers identified Solana as the next big target and filed to offer such crypto ETFs. Following this week's approval of a Solana ETF in Brazil, experts suggest that a U.S. counterpart is sure to come—but when, exactly, remains unclear.

While Brazil has emerged as a trailblazer in the realm of crypto ETFs, the United States—a traditional financial powerhouse—is grappling with a more cautious approach as the U.S. Securities and Exchange Commission (SEC) continues to navigate the complex waters of crypto regulation.

The stark contrast between the two nations’ respective regulatory stances has ignited fervent debate among investors and industry experts.

Markus Thielen, founder of 10x Research, told Decrypt that significant progress has been made towards the launch of a Solana ETF in the United States, with prominent asset managers like VanEck and 21Shares submitting applications to the SEC. But that doesn’t ensure that approvals will be soon to come.

"The path to approval is complex,” Thielen said. “The SEC's regulatory stance on cryptocurrencies like Solana, which could be classified as securities, introduces additional challenges. Furthermore, the absence of a robust Solana futures market, which played a key role in the approval of Bitcoin and Ethereum ETFs, may further complicate and delay the approval process.”

Even so, Brazil's move has ignited hopes for a similar trajectory in the U.S. Matthew Sigel, Head of Digital Assets Research at VanEck, called Brazil as a longtime pioneer in digital assets, with initiatives like digital sandboxes and early approval of a spot Bitcoin ETF fostering innovation and competition. 

“Brazil's approval of a SOL ETF signals that a U.S. counterpart isn't just a possibility—it's as inevitable as the next block in the chain,” Sigel told Decrypt. “That said, it appears U.S. regulation needs a soft fork before it can launch and the White House controls the keys.”

Solana has seen sharper price swings over the past couple years than the likes of Bitcoin and Ethereum however, falling from a 2021 high price of around $260 to a brutal low of about $8 in late 2022 after the collapse of the crypto exchange FTX. It’s now back up to about $153 as of this writing, but even recently has been more volatile than BTC or ETH, including a 30% plunge over the course of a week.

“The high volatility of Solana as a crypto asset may lead some investors to prefer exposure to Bitcoin, which offers a more established narrative for portfolio diversification,” Thielen added. “This preference could influence investor behavior and the broader acceptance of Solana ETFs in the financial market.”

The SEC's role in this evolving landscape is crucial, and while we get occasional glimpses of potential shifts through court filings or political maneuvering, the process isn’t always transparent.

“A lot of stuff goes on at the SEC that is under the hood before we see something surface,” said Manthan Dave, co-founder of Ripple-backed digital asset custody platform, Palisade.

“The SEC is currently responsible for a lot of capital within the U.S., so they have a lot of responsibility,” added Dave. “They will be watching how emerging markets such as Brazil react to the SOL ETF before making a decision.”

Dave highlighted the contrasting approaches between the U.S. SEC and Brazil’s Comissão de Valores Mobiliários (CVM)—aka its version of the SEC.

“The CVM, as with any emerging market regulator, is interested in capturing capital from outside,” he noted. “In contrast, the SEC's priority is primarily to preserve the capital already in the country.”

While optimism for a U.S. Solana ETF approval exists, timelines remain uncertain. 

VanEck's Sigel said that as of now, there’s been no indication of a policy pivot that would accelerate the approval process, and the timeline is likely to remain uncertain until we see concrete changes in regulatory attitudes. Dave, meanwhile, believes that approval by the end of this year would be an “optimistic” scenario.

As with Bitcoin and Ethereum ETFs, Solana ETFs bring potentially sizable benefits to mainstream crypto adoption, letting investors gain exposure to cryptocurrencies without the challenges of acquiring and holding such assets.

Renewed optimism over Solana ETFs comes following another SEC action around the asset. Last week, in a filing in its lawsuit against Binance, the regulator shelved an allegation that Solana is a security. As such, some experts believe that the agency plans to cool off Solana scrutiny—though not everyone is convinced that the court move is as meaningful as that.

Edited by Andrew Hayward