SOL, XRP, or TRUMP: which assets could get their own ETF?
What will be the new crypto ETF
A year ago, the world was introduced to Bitcoin ETFs. This new investment vehicle for BTC proved to be extremely popular, pushing Bitcoin’s price to a record $100,000. Other crypto assets saw this as their opportunity and are now seeking approval for their own spot exchange-traded funds (ETFs).
The first spot crypto ETFs
On January 11, 2024, a landmark event took place in the crypto world—the U.S. Securities and Exchange Commission (SEC) approved the launch of spot Bitcoin ETFs for the first time. Not just one, but 11 ETFs from major firms, led by BlackRock, were approved.
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These ETFs allowed investors to gain exposure to Bitcoin through traditional stock markets without having to buy and store the cryptocurrency themselves. At the time of the ETF launch, Bitcoin was trading around $42,000 and has more than doubled in value since then.
Seeing Bitcoin’s success, its biggest competitor followed suit. On July 23, 2024, spot Ethereum ETFs were officially launched in the U.S., with the SEC approving applications from investment giants such as BlackRock, Fidelity, Invesco, and VanEck.
How have crypto ETFs performed? Since their launch, the total assets under management (AUM) for spot Bitcoin ETFs have exceeded $125 billion. Ethereum ETFs, while significantly smaller in scale, currently manage around $10 billion in assets.
Which cryptocurrencies are seeking ETF approval?
Following the success of Bitcoin and Ethereum ETFs, more cryptocurrencies are now seeking to launch their own spot ETFs.
Recently, Nasdaq submitted ETF applications to the SEC for spot XRP and Litecoin ETFs from CoinShares. Before that, the SEC accepted an application from NYSE Arca for a Solana ETF from Grayscale Investments, which also applied for a Cardano ETF.
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Even meme coins have entered the ETF race. In late January, REX Shares filed applications for multiple ETFs, including those tracking TRUMP, BONK, and Dogecoin. And that’s just a fraction of the assets vying for ETF approval. But which of these crypto projects has a real chance of receiving the green light from regulators?
Who’s next?
The next ETF likely to be approved is a spot Litecoin ETF. Analysts James Seyffart and Eric Balchunas from Bloomberg estimate a 90% chance that it could happen before the end of the year. Other assets with strong approval odds include XRP (65%), Solana (70%), and Dogecoin (75%).
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But why is Litecoin a frontrunner? Unlike other assets, it has already completed most of the regulatory process. All necessary documents have been submitted and approved, and the SEC may classify it as a commodity, similar to Bitcoin, since both use the Proof-of-Work algorithm.
The SEC is expected to make final decisions on these ETF applications by October. However, this does not apply to Hedera and Polkadot ETFs, for which Canary Capital and 21Shares have submitted applications, with their status remaining uncertain.
“ETF issuers will try to launch multiple different products and see what sticks. In the long term, we’ll likely see a wide range of ETFs holding digital assets, while those that fail to attract interest will simply be liquidated,” said James Seyffart.
Seyffart added that before Donald Trump’s victory in the U.S. presidential election, the chances of most of these ETFs being approved were below 5%. However, due to his pro-crypto stance, many initiatives have been given a second chance.
A logical question arises: with Donald Trump as the new U.S. president, will the SEC approve an ETF for the TRUMP meme coin? The answer is highly unlikely. ETF approval requires high liquidity, transparency, and a stable market structure. TRUMP lacks all of these factors, and hype around the coin has long faded. Since Trump’s inauguration, TRUMP’s price has plummeted by 75%—from $75 to $17—while its market capitalization has fallen from $14.5 billion to $3.2 billion.
TRUMP token price. Source: CoinMarketCap.
Conclusion
The spot crypto ETF market is rapidly expanding, but the SEC remains cautious about approving new assets. Litecoin, XRP, Solana, and Dogecoin stand the best chance of launching spot ETFs, as they are already progressing through the regulatory process and have strong liquidity. However, meme coins like TRUMP are unlikely to receive approval due to their weak market structures and waning investor interest.
