In a interview With Tony Edwards of Thinking Crypto, Matthew Sigel, head of digital asset research at VanEck, explained the firm’s decision to file for a Solana spot exchange-traded fund (ETF) instead of an XRP-based ETF. VanEck, a pioneering investment management firm in the United States, has chosen to return Solana due to its Ethereum-like blockchain features and decentralized nature.
Solana is like Ethereum
Sigel explained the technical and regulatory parallels between Solana and Ethereum that influenced VanEck’s custody strategy. “When we looked at our Ethereum custody and looked at the language around decentralization and blockchain characteristics, and then refreshed our deep dive into Solana, we concluded that ETH and SOL assets at this point are fundamentally the same, that no single entity controls more than 20% of Solana’s outstanding supply, and that they cannot unilaterally shut down the chain,” Sigel explained.
This decentralization is a crucial aspect, as the SEC has often emphasized the importance of a lack of centralized control in its assessments of crypto assets. By closely aligning Solana with Ethereum in these respects, VanEck aims to position the Solana ETF as a viable commoditysimilar to Ethereum, in the eyes of regulators.
Discuss the absence of a regulated futures market For Solana, an oft-cited condition for ETF approval, Sigel expressed optimism based on analogies to other markets. “Frankly, we think the focus on this regulated market of significant size – the futures market – is a more moderate scope. There are other ETFs in the market without significant futures markets, like the energy, shipping and uranium markets, where the futures market is simply not important to price formation in those markets,” he said.
Sigel suggested that such precedents could pave the way for a Solana spot ETF, though he conceded that approval might be easier under a different SEC chair, hinting at potential regulatory changes afterward.US Elections.
Sigel also commented on the broader regulatory environment, particularly the ongoing legal challenges between the SEC and various cryptocurrency companies, including the high-profile cases involving Coinbase and Ripple. He described the situation as “schizophrenic” due to the conflicting results of recent court decisions.
For example, federal judges recently ruled that secondary sales of certain crypto assets like XRP or BNB do not constitute securities transactions and do not fall within the scope of the Howey test“The decisions regarding XRP and BNB are very positive for the Coinbase lawsuit,” Sigel said, suggesting that these precedents could influence the outcome of other ongoing legal battles involving crypto assets.
Why no Spot XRP ETF?
When asked about the possibility of launching an XRP-based ETF, Sigel was particularly cautious. He described the complex layers of decision-making that influence the introduction of new ETFs in the cryptocurrency sector.
“To bring an ETF to market, you have to involve a number of different stakeholders,” Sigel said, emphasizing the need for alignment between regulators, issuers, market infrastructure providers and end consumers. “You have to have counterparties like exchanges, market makers, custodians that also support the asset and then you have to be able to find customers who want to buy it,” Sigel said.
For XRP, Sigel identified significant hurdles in two key areas: internal conviction and customer demand. “When we think about XRP, we forget a couple of them: internal conviction and customer demand. So I would say one of those is less likely,” he noted.
Sigel hinted at broader ambitions for crypto ETFs, referencing VanEck’s existing products in Europe. “If you look at our ETF lineup in Europe, we have a leading crypto product that matches the top five assets, and then we have a leading smart contract ETF that matches the top five top assets,” he noted. This points to a strategic roadmap for the potential introduction of similar products in the U.S., depending on regulatory approval and market conditions.
“The first thing that really needs to be clarified is the SOL ETF. Can we bring it to market? Then I think issuers will try with the other proof-of-stake coins, and then, you know, the building blocks will be put in place and someone will do a top 5 (or) top 3 (ETF).
At press time, SOL was trading at $142.
Featured image from YouTube, chart from TradingView.com
