Cryptocurrency ETPs: What’s Next for Solana and XRP?
The cryptocurrency landscape is poised for a significant shift in 2025, with Solana and XRP potentially being the next in line for spot exchange-traded products (ETPs). According to a recent J.P. Morgan Research report, anticipated regulatory changes, including a new Securities and Exchange Commission chair and potential legislation clarifying crypto asset classification, could pave the way for the next wave of cryptocurrency ETPs.
Regulatory Environment: A Key Factor
The report highlights that investors’ demand for “altcoin” products may be limited compared to bitcoin and Ethereum offerings. However, the new regulatory environment appears crucial for future approvals, as debate continues at the SEC around what constitutes a security versus a commodity—a key distinction that has delayed “altcoin” ETP applications.
Modest Projections for Solana and XRP ETPs
J.P. Morgan estimates that potential Solana ETPs could attract $3 billion to $6 billion in assets, while XRP products might draw $4 billion to $8 billion. These projections are more modest compared to bitcoin’s success, reflecting the smaller market capitalization of these tokens.
Firms Positioning Themselves for Approval
Several firms have already positioned themselves for potential approval, with Grayscale operating a $99 million Solana trust and a $12 million XRP trust that could convert to exchange-traded funds, similar to its previous bitcoin trust conversion.
Challenges Ahead
The report notes that multiple ETP applications for tokens like Solana have already been rejected by the current SEC, but firms may resubmit under new leadership that could take a more favorable stance toward crypto innovation. BlackRock Inc.’s decision not to pursue a Solona ETP due to uncertain investor demand highlights the challenges ahead.
Market Fundamentals Will Determine Success
Market fundamentals will likely determine the success of new crypto ETPs in 2025. The report suggests that Ethereum ETP assets currently represent just 3% of the token’s $12 billion total market cap six months after launch, compared to bitcoin ETP assets reaching 6% of bitcoin’s $108 billion market cap in their first year.
A Template for Future Multi-Token Products
The recently approved bitcoin and Ethereum hybrid ETP products from Franklin Templeton and Hashdex, possibly set to launch this month with an 80/20 split matching market caps, could provide a template for future multi-token products. As the cryptocurrency market continues to evolve, it remains to be seen which tokens will gain traction and attract significant investor interest.
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