Cboe's Vice President and Global Head of ETF Listings, Rob Marrocco, believes that crypto ETFs beyond Bitcoin and Ethereum are unlikely until there are changes in the market and regulatory landscape.

Marrocco discussed during a podcast on June 11 that expectations for a Solana (SOL) and XRP spot ETF in the near term are unrealistic because these cryptocurrencies lack a futures market, a key factor in the approval of spot Bitcoin and Ethereum ETFs.

He explained that the viable path to launch a Solana ETF would first require introducing a Solana futures ETF, which would then pave the way for a spot ETF.

Marrocco emphasized that even if Solana futures ETFs were introduced, they would need a significant trading history to establish credibility, a process that could be lengthy and time-consuming.

He underscored the extended timeline, noting that it can be a "lengthy process" to reach that stage.

An Alternative Approach

Marrocco proposed that a faster route would involve establishing a comprehensive regulatory framework for crypto. Such a framework would clarify whether digital assets are classified as securities or commodities, allowing the SEC to proceed with ETF approvals accordingly.

However, achieving this would require legislative action, which could be equally time-consuming, depending on political dynamics.

Despite these challenges, especially during an election season, Marrocco suggested that having a clear regulatory framework would be a quicker path compared to waiting for a futures market to develop.

Agreement Among Experts

Lara Crigger, editor-in-chief of VettaFi, largely agreed, pointing out that without a futures market for Solana, there is less data available for the SEC to assess whether the market is sufficiently large and transparent to support an ETF.

Industry experts hold differing opinions on the possibility of Solana ETFs. JP Morgan and Bloomberg express skepticism, while Bernstein believes that the approval of Ethereum ETFs has set a precedent for similar tokens like Solana to be classified as commodities.

Legislative Developments

In the U.S., regulatory uncertainty is gradually easing as crypto gains prominence as a crucial issue for American voters during an election year.

On May 22, Congress passed a new legislative bill known as the “Financial Innovation and Technology for the 21st Century Act (FIT21).” This bill aims to establish a comprehensive regulatory framework for digital assets, ensuring investor protection and market integrity.

FIT21, passed with bipartisan support in the House, delineates regulatory responsibilities between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

Under the act, the CFTC will oversee digital commodities, while the SEC will regulate digital assets offered as part of an investment contract. This clarity is essential for reducing regulatory overlap and providing clearer guidelines for market participants.

The bill awaits a Senate vote before becoming law.