Solana, XRP, Litecoin, Dogecoin: Why the SEC is Delaying Approval of ETFs
The U.S. Securities and Exchange Commission (SEC) is causing cryptocurrency investors to fidget once again. The SEC will not decide by the originally planned deadline of October 16 on applications for exchange-traded funds (ETFs) that should represent the qualities of Solana (SOL), XRP, Litecoin (LTC), and Dogecoin (DOGE). With the expiration yesterday of a commenting period, speculation arose that the approval process might be expedited. But instead, the SEC is taking additional deliberation time and has set final deadlines for April 2024 for the respective applications from investment firms like Global X and Bitwise.
In such processes, the SEC is generally given a 240-day window within which to make a decision. The case of the first Bitcoin Spot ETFs, for which the SEC is expected to make a decision by January, illustrates this. Cryptocurrencies like Solana and XRP are not unknown quantities nor obscure choices for the banks and financial advisors with connections to the SEC, thus making the delay in the approval process all the more intriguing.
The crypto community has been eagerly anticipating the introduction of ETFs for well-known altcoins because such financial products are regarded as an opportunity to open up new investor groups. However, many are currently asking themselves why the SEC is delaying these specific decisions. With a number of applications for crypto ETFs currently in the approval phase, the SEC is consistently seeking more time for its decision-making process while also facing mounting pressure from both the industry and the judiciary to finally allow crypto ETFs on the major U.S. financial market.
The legal situation around Solana and XRP is also a reason worth considering. These two altcoins have been under scrutiny from the SEC in separate lawsuits. In July, a judge decided in a summary ruling that XRP did not necessarily have to be classified as a security. Nevertheless, the SEC is putting pressure on projects like Solana and Ripple to have their ICOs scrutinized in retrospect according to existing regulations, making them securities under current U.S. laws.
As for altcoins like Dogecoin and Litecoin, such lawsuits are considered less likely. However, from the perspective of the SEC, the approval of ETFs for altcoins could implicitly lead to these cryptocurrencies being accepted as similar to traditional stocks or commodities—a precedent-setting case with uncertain legal implications.
Meanwhile, many experts assume that approval for a regular Bitcoin Spot ETF will clear the path for altcoin ETFs, although this is not guaranteed. The situation with the pending Solana, XRP, Litecoin, and Dogecoin ETFs is monitored closely by observers aiming to glean insights regarding the SEC’s approach towards the cryptocurrency sector.
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