ETH ETF Approval Could Lay the Groundwork for Solana ETF and Commodity Classification

Source: Blockchain Knights

According to a recent report from Bernstein, the U.S. approval of a spot ETH ETF could set a precedent for classifying Solana as a commodity.

The classification of Crypto assets as either securities or commodities is of great significance. Commodity classification facilitates the application and approval of ETFs, while security classification subjects assets to stricter oversight by the SEC (U.S. Securities and Exchange Commission).

The approval of a spot ETH ETF would mean that the SEC would consider the second-largest Crypto asset a commodity, setting an important precedent. This would mark the first time a non-BTC digital asset has received such a classification, sparking speculation that Solana would follow suit.

Earlier this week, Bloomberg analysts said that the probability of the SEC approving a spot ETH ETF would increase from 25% to 75%, and the price of ETH subsequently rose.

The SEC’s final decision on these applications is expected to come later, after being delayed several times before.

Bernstein's report noted that the spot BTC ETF rebounded 75% in price after approval, suggesting that a similar price trend could be seen in the spot ETH ETF after approval.

However, according to research by CryptoQuant, if the SEC rejects the applications, it could cause ETH prices to experience significant volatility and sharp price corrections in the coming days.

Crypto asset investor Brian Kelly expressed similar optimism about the potential regulatory approval of Solana and ETH ETF products in a recent interview with CNBC.

Kelly speculated that Solana could be the next Crypto asset to receive ETF approval, and stressed that it is likely to be a candidate asset promoted by investment managers.

Kelly emphasized that BTC, ETH, and Solana are the "three major" digital assets that may be approved in this round of ETF products. The success of the BTC ETF has seen investment managers collectively accumulate a large amount of BTC, worth approximately $58 billion, indicating strong market demand for regulated Crypto investment products.

However, Kelly also acknowledged that there is some skepticism within the Solana community.

He mentioned that Solana’s initial coin offering (ICO) and its classification as a security by the SEC could pose challenges to the approval of the ETF.

Nevertheless, Kelly remains optimistic that changes in the regulatory and political landscape could increase the chances of approval for the Solana ETF if it gets the green light.

The Bernstein report, which was released before the SEC makes a final decision on the ETH ETF application, also highlights that the Biden administration’s stance on Crypto assets could shift based on recent developments.

In addition, the report notes that if Trump is re-elected, his administration may further support the Crypto asset industry through legislative and regulatory measures.

“If Trump is elected, crypto assets could receive significant legislative and institutional support, leading to long-term structural changes in the financial integration of crypto assets,” the report reads.

The Solana ETF could be approved as it comes at a time when the regulatory environment is changing and bipartisan support for crypto assets is growing.

The recent passage of the Financial Innovation and Technology for the 21st Century (FIT21) Act by the House of Representatives with strong support from the Democratic Party indicates a potential political shift.

Attorney Jake Chervinsky described the passage of the bill as a “vote of no confidence” in the SEC’s current approach to crypto asset regulation,suggesting the political consequences of maintaining an anti-crypto asset stance.

Regulator approval of the Solana ETF would mark a major milestone for the crypto asset industry, indicating mainstream acceptance and integration. However, with the ETH ETF still awaiting approval, the industry remains cautiously optimistic about the future.