New ETF Applications: What They Mean for XRP, Solana, and the Crypto Market

New ETF Applications: What They Mean for XRP, Solana, and the Crypto Market

BlackRock metamorphosed a few weeks ago from a cautious participant to a heavyweight player in the Bitcoin market. The world’s largest asset manager with over $8 trillion in capital has filed an application for a Bitcoin spot ETF in the USA. The U.S. Exchange Commission (SEC) is still examining the application and is expected to decide on it by March 2024. Meanwhile, smaller asset managers hope for a chance to participate in the ETF cake. They are filing applications for so-called altcoins like XRP and Solana, which are best known from the DeFi sector.

European asset manager Finty is now treading this path with applications similar to BlackRock’s initial proposals. Company documents submitted to the SEC reveal that Finty is planning for a spot ETF, referred to internally as the “Finty Fund,” involving altcoins such as XRP, Solana, TerraUSD, and Cardano. At the moment, there is neither a similar ETF in the U.S. nor Europe. There are both physical and synthetic products on individual cryptocurrencies, but so-called spot and derivative ETFs are part of the legal grey area of the market.

New Wave of Financial Products Could Be Dangerous

However, isn’t the development of these products a step towards a serious market for derivatives? Andrea Stancel, a financial expert and professor at the University of Vienna, fears that such products could also attract speculators, whom she describes as speculators and amateurs.

“The promises of profit from the crypto world remain attractive, but unfortunately, the risk is also correspondingly high,” warns Stancel. Without professional supervision, the consequences could be fatal if one loses track. That’s why thorough inquiries and advice – preferably from experts – are of utmost importance.

The Bearish cases of TerraUSD as well as newer collapses in the DeFi world have shown how much excess money flowed into the market. However, Finty’s goal could be to equal or even exceed the potential observed in such cases with corresponding conditions in the future.

US Regulations as a Market Gatekeeper

At the moment, however, Finty’s intentions remain at the level of speculation. Since the SEC strongly rejected a previous application for a Bitcoin ETF, the path to a Spot ETF requires a security level that the authority currently sees as not sufficiently met. Additionally, XRP is still classified as a security by the SEC, which is the reason for ongoing speculation concerning Ripple.

Nevertheless, Stancel sees a possible breakthrough for crypto ETFs in the U.S. as positive. She considers the strict border controls of the SEC as the right way to differentiate wheat from the chaff. Gatekeepers like the SEC are extremely important, Stancel emphasizes, because they enable safe trading for consumers and also final decisions that could have long-term consequences.

The major companies such as Grayscale, ARK Invest, and Fidelity continue to seek legal opportunities to bring their own versions of a Bitcoin ETF onto the market. When and if these efforts will bring a breakthrough solution cannot be foreseen at this time. However, the ETF idea remains a massive financial product that is worth keeping an eye on.