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Which Crypto ETF Will Be Approved Next in 2025?

By:
Nik Maz
| Editor:
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Updated:
January 28, 2025
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4 min read

Tracking the progress and potential approval of cryptocurrency ETFs is vital for investors and crypto traders. In this section, we'll delve into the prospects of Solana, Litecoin, and Hedera ETFs gaining regulatory approval by 2025.

Solana ETF Approval Prospects

Solana, known for its high-performance blockchain, stands as a prominent candidate in the crypto ETF market. Polymarket, a popular prediction platform, has projected an 85% chance of the US SEC approving Solana ETFs by the end of 2025, a significant increase from its earlier estimate of 45%. This optimistic outlook is fueled by the interest of leading asset management firms such as Grayscale, VanEck, and Bitwise, all of which have submitted proposals for Solana ETFs.

Solana's appeal lies in its scalability and fast transaction speeds, which have attracted a substantial user base and investor interest. This foundational strength enhances its probability of gaining ETF approval, despite the challenging regulatory environment.

Litecoin & Hedera Potential Approval

Litecoin and Hedera are often highlighted by analysts as strong contenders for ETF approval. According to Bloomberg analysts Eric Balchunas and James Seyffart, these two cryptocurrencies might have a better chance of gaining regulatory approval before Solana and XRP.

Litecoin has been in the market for a long time and is viewed by many as silver to Bitcoin's gold. Its steady market presence and robust infrastructure make it an attractive option for ETF investors. Similarly, Hedera's unique hashgraph technology, which promises enhanced security and speed compared to traditional blockchains, positions it favorably for ETF consideration.

The interest in these cryptocurrencies is not just speculative but also driven by their technological capabilities and broad market acceptance. This technical foundation can make them appealing to regulators who look for stability and potential growth.

In summary, while Solana enjoys a high prediction rate for ETF approval thanks to its robust infrastructure and backing by major firms, Litecoin and Hedera also exhibit strong prospects due to their established market positions and innovative technologies. Investors will want to keep a close watch on these developments as the path to ETF approval unfolds.

Challenges in ETF Approvals

Understanding the complexities and challenges of obtaining approval for a cryptocurrency ETF involves examining the regulatory and legal landscape. XRP, for instance, faces significant hurdles due to its ongoing legal conflicts.

Regulatory Hurdles for XRP

The approval of an XRP ETF faces substantial challenges primarily due to its ongoing legal battles with the US Securities and Exchange Commission (SEC). These legal issues revolve around whether XRP should be classified as a security, which has been a contentious point of debate.

Despite Ripple achieving some legal victories, the designation of XRP as a security remains unresolved. This uncertainty complicates the regulatory approval process for an XRP ETF. Experts suggest that the renewed interest in cross-border payments could bolster XRP's chances for eventual ETF approval, provided these legal barriers are overcome.

Legal Uncertainties Impacting Approval

Legal uncertainties are one of the primary obstacles impacting the approval of cryptocurrency ETFs. For XRP, the crux of the issue lies in its classification and the SEC's stance on it. Even though Ripple has secured favorable rulings in some instances, the overarching legal environment remains unstable.

The ambiguity surrounding XRP's legal status has made investors and regulators wary. Until the classification of XRP as a security is decisively resolved, the approval for an XRP ETF will likely remain on hold.

XRP ETF Approval Challenges

  • High impact from ongoing legal battles. 
  • High impact from debated security classification. 
  • High impact from pending regulatory approval. 
  • Moderate impact from market confidence. 

XRP, while a promising candidate due to its utility in cross-border payments, must navigate these significant legal and regulatory challenges to achieve ETF approval. The resolution of its legal status will play a crucial role in determining its future as an ETF candidate.

SEC Leadership Impact

New SEC Chair's Influence

The change in the US Securities and Exchange Commission (SEC) leadership, with Paul Atkins set to succeed Gary Gensler as chairman in January 2025, is anticipated to have a significant effect on the crypto Exchange-Traded Fund (ETF) approval process. Paul Atkins is known to be more crypto-friendly, which could create a conducive environment for the approval of crypto ETFs. This shift in leadership could profoundly impact the progression of crypto ETF approvals for various digital assets.

Atkins' approach to cryptocurrency regulation stands in stark contrast to Gensler's. Where Gensler has been perceived as cautious and regulatory-heavy, Atkins may bring a more open and favorable perspective towards cryptocurrencies. His potential appointment is generating optimism among crypto enthusiasts and investors.

Outlook for Crypto ETF Approvals

With the possibility of a new, pro-crypto leadership under Paul Atkins, the outlook for crypto ETF approvals in 2025 appears promising. Various cryptocurrencies - including Solana, XRP, Litecoin, and Hedera - stand a better chance of receiving approval.

Experts suggest that XRP, with its renewed focus on cross-border payments, presents a strong candidate for eventual ETF approval if its legal barriers are resolved. Solana, as a high-performance blockchain, also garners significant attention and could be among the early contenders for ETF approval.

The anticipation of Paul Atkins' leadership as SEC chairman brings a renewed sense of hope and potential for the approval of crypto ETFs. Investors and crypto traders are closely monitoring these developments, with a keen eye on how they will shape the future landscape of cryptocurrency investments.

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