The crypto world held its breath, anticipating a tidal wave of Solana ETFs, but a wrench has been thrown into the gears. A U.S. government shutdown has put a temporary freeze on the SEC’s approval process, leaving investors in suspense.
Solana ETF Approval Delayed by Government Shutdown
Major cryptocurrencies experienced a downturn on Friday, as the anticipated approval of Solana ETFs faced unexpected delays. Crypto enthusiasts were eagerly awaiting the green light for exchange-traded funds (ETFs) investing in Solana (SOLUSD), a rising star in the crypto arena. However, the partial U.S. government shutdown has introduced significant uncertainty into the approval timeline.
What’s the Hold-Up? The Government Shutdown Effect
The Securities and Exchange Commission (SEC) was facing a Friday deadline to rule on ETF applications from major players like Franklin Templeton (BEN) and Invesco (IVZ). Approval would have marked a significant step towards mainstream adoption of digital assets. Solana, the sixth-largest cryptocurrency and a strong competitor to Ether (ETHUSD), allows for the development of decentralized applications, making it an attractive investment.
A Timeline Thrown into Disarray
The partial U.S. government shutdown, commencing on October 1st, has brought the SEC’s review and approval processes to a standstill. An SEC spokesperson confirmed that the agency is operating under a contingency plan, focusing on essential functions while halting many normal operations. This includes the review of new financial product applications, such as crypto ETFs.
Expert Insights: What Happens Next?
Roxanna Islam, head of sector and industry research at VettaFi, predicts delays in crypto ETF decisions. “Once the government reopens, I’m not sure [about the timeline],” she stated. “I think it will still be this year…but we’re going to have to wait until the government reopens to see any progress.”
Beyond Solana: Other Crypto ETFs in the Balance
The SEC also has upcoming deadlines for ETFs tied to XRP (XRPUSD), Dogecoin (DOGEUSD), and Cardano (ADAUSD), which rank as the fifth, eighth, and tenth-largest cryptocurrencies, respectively. Optimism remains high that these applications will eventually be approved once the government resumes full operations.
A Rule Change That Could Speed Things Up
A rule change approved by the SEC in September may streamline the listing process for new crypto ETFs. This change empowers exchanges like the New York Stock Exchange (ICE), Nasdaq (NDAQ), and Cboe Global Markets (CBOE) to adopt generic listing standards, potentially reducing the time from filing to launch from 240 days (or longer) to just 75 days, according to Adrian Fritz, global head of research at crypto asset manager 21Shares.
Potential Market Impact: Weighing the Delays
However, the delay caused by the government shutdown could dampen demand for these products, according to VettaFi’s Islam. “You might get tired of waiting for it,” she noted, suggesting that prolonged delays could lead to downward price action, which may reverse upon ETF approval.
- Solana (SOLUSD) experienced a 7.9% drop, settling around $183.27 on Friday afternoon.
- XRP (XRPUSD) plunged 19.53% to $2.03.
- Dogecoin (DOGEUSD) fell 12.35% to $0.22.
- Bitcoin saw a more moderate decline of 4.1%, trading around $111,917.
Expert Perspectives on the Delay
- Adrian Fritz (21Shares): Believes the delay could heighten anticipation, drawing parallels to significant inflows seen in European and Canadian exchange-traded products tied to smaller cryptocurrencies.
- Roxanna Islam (VettaFi): Cautions that prolonged delays could erode investor enthusiasm, potentially impacting demand for the ETFs once approved.
What’s Next? Keeping an Eye on the Horizon
As the government shutdown continues, the crypto community awaits updates on the SEC’s timeline for reviewing and approving these highly anticipated Solana ETFs.
