The cryptocurrency industry continues to make strides toward mainstream adoption as asset management firms ramp up efforts to launch innovative exchange-traded funds (ETFs). Recent developments include the US Securities and Exchange Commission's (SEC) decision to delay its ruling on Franklin Templeton's proposed Crypto Index ETF until early 2025, and Bitwise's registration of a statutory trust for a potential spot Solana ETF.
SEC Delays Decision on Franklin Templeton Crypto Index ETF Approval to 2025
In a pivotal development for the cryptocurrency industry, the United States Securities and Exchange Commission (SEC) has announced a delay in its decision regarding the approval of the Franklin Templeton Crypto Index ETF. The verdict, originally expected sooner, has been deferred to Jan. 6, 2025, as the regulatory body seeks additional time for deliberation.
In a letter dated Nov. 20, the SEC stated that it had not received any public comments following the proposed rule change for the listing of the Franklin Templeton Crypto Index ETF on the Federal Register on Oct. 8, 2024. Highlighting the complexity of the proposal, the SEC explained:
“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.”
The Commission further clarified its timeline, citing Section 19(b)(2) of the Securities Exchange Act of 1934 as the basis for the delay. The decision deadline has been set for early 2025, during which the SEC must approve, disapprove, or initiate proceedings to evaluate the proposed rule change.
A Watershed Moment for Crypto Index ETFs
Franklin Templeton filed for approval of its crypto index ETF in August 2024, marking a significant step toward the mainstream adoption of cryptocurrency-focused investment vehicles. Crypto index ETFs, much like their traditional counterparts such as the S&P 500 index funds, offer investors exposure to a basket of digital assets without the need to pick individual cryptocurrencies. This diversification minimizes the risks associated with direct investments in volatile crypto markets.
Katalin Tischhauser, head of research at Sygnum crypto bank, described the potential approval of crypto index ETFs as a "logical next step" in the digital asset space. Tischhauser noted that indexes allow investors to participate in the upside of the markets without having to pick individual winners and make extensive, time-consuming, and often costly mistakes.
Franklin Templeton is not the only financial institution vying for regulatory approval of a crypto index ETF. The race has intensified in recent months as firms recognize the growing appetite for diversified exposure to digital assets among retail and institutional investors.
In October 2024, the New York Stock Exchange expressed interest in listing Grayscale’s proposed crypto index ETF, submitting a formal request to the SEC for approval. The Grayscale ETF, if approved, would be the first of its kind in the United States. Regulatory approval of Grayscale’s ETF could serve as a catalyst for the broader adoption of crypto index funds, potentially unlocking substantial capital inflows into the digital asset market.
The approval of a crypto index ETF would echo the groundbreaking impact of Bitcoin and Ether ETFs approved earlier in 2024. These ETFs facilitated significant inflows of capital, helping legitimize the cryptocurrency market in the eyes of traditional investors.
Crypto index ETFs could replicate this success by offering a more comprehensive exposure to the crypto ecosystem, enabling investors to hedge risks while capturing the overall growth of the industry. Analysts anticipate that such products could attract a new wave of capital, both from retail investors and from traditional finance institutions, further bridging the gap between conventional and digital asset markets.
What Lies Ahead?
The SEC’s decision to delay approval shows the intricate regulatory challenges associated with launching novel financial products. Industry stakeholders are closely watching the developments surrounding Franklin Templeton’s application, viewing the Commission’s verdict as a bellwether for future crypto index ETFs.
The deferred decision suggests a broader regulatory uncertainty that continues to shape the cryptocurrency industry. However, it also shines the spotlight on the growing recognition of the need for well-structured, investor-friendly crypto products in the United States.
As the January 2025 deadline approaches, market participants remain optimistic that the eventual approval of crypto index ETFs will mark a watershed moment, driving greater acceptance and investment in digital assets.
Bitwise Registers Trust for Spot Solana ETF, Signaling Potential SEC Filing
In related news, digital asset management firm Bitwise has taken a significant step toward launching a spot Solana ETF, registering a statutory trust for the proposed product in Delaware. This development, revealed in the Delaware Division of Corporations database on Nov. 20, 2024, indicates that Bitwise may soon submit an S-1 registration statement to the United States SEC, joining the competitive race to offer crypto-focused ETFs in the US.
The Bitwise Solana ETF trust was registered under the name CSC Delaware Trust Company, a prominent corporate services firm based in Wilmington, Delaware. While the statutory trust signals Bitwise's intent to pursue regulatory approval, the firm must still complete an S-1 filing with the SEC and submit a 19b-4 application for the ETF to be formally reviewed by the regulator.
The potential Solana ETF aims to track the performance of Solana (SOL), the world’s fourth-largest cryptocurrency by market capitalization. If approved, it would join the growing list of crypto ETFs providing investors with direct exposure to digital assets via regulated financial instruments.
Although Bitwise has yet to disclose the stock exchange that would list the Solana ETF, its Bitcoin and Ethereum ETFs are currently listed on NYSE Arca, suggesting the Solana product could follow suit. A ticker symbol for the proposed ETF has not yet been revealed.
Bitwise’s move to register the Solana trust follows a similar pattern to its filing for a spot XRP ETF in October 2024, which was registered in Delaware and accompanied by an S-1 form filed with the SEC the following day. By entering the race for a spot Solana ETF, Bitwise positions itself alongside other major players like VanEck and Canary Capital, which have also signaled interest in launching Solana-based ETFs.
VanEck’s Head of Digital Asset Research, Matthew Sigel, has expressed optimism about the prospects for a US-approved spot Solana ETF. Sigel anticipates that regulatory approval could become more feasible under the incoming Trump administration, which has historically demonstrated a more crypto-friendly stance. Sigel stated that the odds of approval by the end of 2025 are "overwhelmingly high," reflecting a potential shift in regulatory dynamics.
Market Expectations for a Spot Solana ETF
The launch of a spot Solana ETF could provide investors with a new gateway to access one of the most dynamic cryptocurrencies in the market. Solana has experienced a remarkable resurgence during the ongoing bull market, with its price surging over 2,360% to reach $236.91, according to CoinGecko data. However, it remains shy of its all-time high set in 2021.
Despite the enthusiasm surrounding Solana, industry experts predict that initial inflows into a Solana ETF would be modest compared to Bitcoin and Ethereum ETFs, which have historically dominated market share.
Nevertheless, Bitwise’s registration comes at a time of heightened activity in the crypto ETF space. Asset managers have filed for other spot ETFs, including those based on Litecoin (LTC), demonstrating the diverse strategies employed by financial institutions to capitalize on the growing demand for regulated crypto products.
Solana’s performance has made it a standout candidate for ETF inclusion. Its scalability and ecosystem growth have attracted significant attention, though it has also faced criticism for its challenges during bearish market cycles. If approved, a Solana ETF would provide investors with exposure to one of the most innovative blockchains without the need to directly manage digital wallets or private keys.
Bitwise’s pursuit of a spot Solana ETF is part of a broader push toward integrating cryptocurrency into traditional financial markets. As regulatory clarity continues to evolve, firms like Bitwise are positioning themselves to meet the growing demand for accessible and regulated digital asset investment vehicles.
While the SEC’s timeline for approving crypto ETFs remains uncertain, industry insiders remain optimistic about the prospects of a more supportive regulatory environment. The potential approval of a Solana ETF could open new doors for investors and mark another milestone in the mainstream adoption of cryptocurrency.
