Which tokens are likely to launch ETFs after ETH? SOL has the highest expectations, while Doge has a relatively high probability

Author: Weilin, PANews

In the early hours of May 24, Ethereum ETF reached a milestone in the United States, as the Securities and Exchange Commission approved the issuer's 19b-4 filing. Consequently, discussions around whether other tokens might launch ETFs have also become popular. What challenges will the approval of ETFs for other tokens face? If there is a possibility, which tokens are likely to be launched first? SOL, PEPE, or DOGE?

From the perspective of industry experts, the consensus around a token and whether it is defined as a security are two hard thresholds. Currently, if there are no significant changes in the U.S. regulatory framework, the next ETF may not emerge for another two to three years.

High Hopes for SOL, But Low Possibility

On May 23, Brian Kelly, CEO of BKCM, predicted on CNBC's "Fast Money" program that Solana (SOL) could become the next cryptocurrency to launch a spot exchange-traded fund (ETF) in the U.S. However, this bold prediction was immediately met with some opposition from industry experts, who pointed out several significant regulatory and market challenges.

Firstly, the U.S. Securities and Exchange Commission (SEC) has classified Solana as a security, as mentioned in lawsuits against major exchanges like Coinbase and Kraken. This complicates the path for Solana's approval. Additionally, unlike Bitcoin and Ethereum, which have futures ETFs, Solana lacks this critical market foundation.

Bloomberg's ETF analyst James Seyffart stated that before any spot ETF is launched, Solana needs futures products listed on the Chicago Mercantile Exchange or a strong regulatory framework for cryptocurrencies established by the U.S. Congress.

Currently, Bitcoin and Ethereum are the only two cryptocurrencies in the U.S. that have approved futures ETFs. Major ETF issuers also show little interest in launching ETFs for assets other than these two digital currencies. Notably, BlackRock, a well-known ETF issuer, has stated that there are no plans to launch ETFs for other altcoins, including Solana.

Although Franklin Templeton, which manages trillions in assets, recently praised Solana and one of its founders, Anatoly Yakovenko, sparking speculation about whether the firm would consider applying for a spot Solana ETF in the future, very few ETF issuers have expressed intentions to apply for a spot Solana ETF at this time.

Nate Geraci, president of ETF Store, agreed with Seyffart's viewpoint, suggesting that without a futures market and clearer rules, a spot Solana ETF may not materialize. He stated that Congress needs to establish a legitimate regulatory framework for cryptocurrencies before there is any chance for such a product to be approved.

Adam Cochran, a partner at Cinneamhain Ventures, believes that due to simpler regulatory conditions, Litecoin (LTC) or Dogecoin (DOGE) may become the next cryptocurrencies to receive ETF approval. Both Litecoin and Dogecoin utilize a proof-of-work (PoW) consensus mechanism similar to Bitcoin, which may make their regulatory paths less contentious.

On May 23, Grayscale launched two new investment trusts, Grayscale Near Trust (NEAR) and Grayscale Stacks Trust (STX). Grayscale's Chief Product and Research Officer Rayhaneh Sharif-Askary stated that 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 like Grayscale could also provide clues for the next ETF, but the current situation remains unclear.

Consensus and Definition as Securities are Hard Thresholds

On May 23, during a Twitter Space titled "What Will Ethereum Spot ETF Bring?" co-hosted by PANews and OKX, attendees discussed this issue. The host of 0x Dry Goods, Big Orange @0xVeryBigOrange, believes that analysis should first focus on the top 10 or even top 5 by market capitalization, stating that apart from Bitcoin and Ethereum, SOL is almost impossible due to many ongoing controversial lawsuits. BNB is also unlikely, and he thinks DOGE has a slightly higher probability.

"I have been paying attention to DOGE recently, but I still believe the probability of other tokens launching ETFs soon is extremely low, and there is a qualitative leap between launching and not launching. You can use the process of elimination, and tokens with smaller market caps are even less likely to be considered," Big Orange added.

Ethereum ecosystem developer 0xAA @0xAA_Science shares the same view, stating, "After Ethereum, I also think we should consider market cap. I hope to give more opportunities to memes, as fairly launched memes may be the least like securities, but I don't think the U.S. will accept the public investing in these memes in the short term, so let's take it slow."

Mindao @mindaoyang, founder of dForce, mentioned several indicators previously discussed, one being the concentration of chips. He believes that in the top 20, the stickiness is also related. For example, Bitcoin and Ethereum have been in the market for over 10 years, and their chips are very dispersed, while Solana has only been around for four to five years. Additionally, he pointed out the concentration of its foundation, including FTX's previous 10% holding, which means related parties together may not hold less than 20%, making Solana essentially impossible.

The approval of Bitcoin and Ethereum ETFs also has a leading indicator: they must be traded on the Chicago Mercantile Exchange (CME) because ETFs need to reference prices. Therefore, aside from Ethereum and BTC, there are no other assets traded there. I believe there may be at least a two to three-year gap before a third one emerges. If there is a third, I think Dogecoin might meet that requirement, but its market cap is too low; creating an ETF with over $20 billion seems quite impractical.

Currently, Bitcoin and Ethereum hold a very strong advantageous position for ETFs because their narratives are completely different. The narrative of Ethereum overlaps significantly with Solana. So with Ethereum, why would we need Solana or any of these others? There may not be much narrative differentiation, so at least in the next two to three years, I believe only BTC and ETH will be available as investable ETFs; I truly don't see any others.

Data analyst Phyrex @Phyrex_Ni believes that on an annual basis, this is very possible. Secondly, I want to emphasize the issue of DOGE. We still need to look at the SEC's conditions for approving spot ETFs. The first is that it must be a non-security. Let's say DOGE is a non-security; this point may be satisfied.

The second point is that there must be sufficient consensus. Consensus refers to market capitalization funds, and when we see refusals for ETFs, there are many factors involved, including market manipulation. DOGE exhibits very obvious market manipulation; you can clearly see that whenever Elon Musk posts anything related to DOGE, there is a market reaction, and the price movement can be quite significant. So from this perspective, it belongs to a highly concentrated and manipulated market.

Therefore, from this aspect, regardless of who the SEC chair is, whether FIT21 is passed or not, the likelihood of DOGE passing a spot ETF is very low, and this is also a reason for its market cap.

Secondly, we can look at market cap; whether it's DOGE or anyone else, the gap is quite large. Everyone knows Solana is impossible. Even if Solana's consensus is reached, its biggest issue is the SEC. The SEC also cares about its image, especially now that it has focused on Solana in the Coinbase lawsuit, so this lawsuit will definitely occur; it's just a matter of when.

Even if Gary Gensler (SEC Chair) is replaced, the relationship between Solana and Coinbase will still face legal scrutiny. The possibility for BNB is low. Ripple has a chance; XRP could be possible, but Ripple has not won any SEC lawsuits. Ripple has merely gone from losing 100 points to losing 80 points.

We see that overall in the cryptocurrency space, those that meet the criteria for being securities may lack consensus, and those that have consensus may not meet the criteria for being securities. According to the SEC, it has clearly stated that apart from BTC, ETH, BCH, LTC, DOGE, and STX, there are no other tokens explicitly stated as non-securities.

Additionally, as Mindao mentioned, you must first be listed on the CME; if you haven't even reached that level, it may be quite difficult.

So moving forward, even if there are new ETFs, it is only possible after FIT21 is passed, to see if the definitions for the entire cryptocurrency industry change. If it truly can change this point, then there may be new ones. But who will those new ones be? We can only say at that time. If this conclusion does not change, then it is very likely that even existing tokens will not meet the conditions.