Bitwise Asset Management’s successful launch of the first U.S. spot Solana ETF has caused a significant shift in the crypto ETF landscape. The move has taken the industry by surprise, especially with the Securities and Exchange Commission (SEC) in shutdown during the launch. This unexpected development has prompted competitors to quickly adjust their strategies, with some even taking similar actions to gain an edge in the emerging market.
On October 28, Bitwise launched the Solana Staking ETF, which tracks the price of Solana, the sixth-largest cryptocurrency. The firm’s decision to move forward without waiting for formal SEC approval has given it a first-mover advantage in what many see as the next big wave in crypto ETFs.
This product quickly gained traction, attracting $420 million in its first week, according to LSEG data. Industry experts predict that altcoin ETFs, including those for Solana, could amass $14 billion in their first six months, with Solana taking a significant share.
By acting quickly, Bitwise has set a new standard in the crypto investment world. “We are following the rules,” said Matt Hougan, Bitwise’s chief investment officer, defending the firm’s actions. The decision has disrupted plans for several competitors who had been taking a more cautious approach, waiting for SEC approval or clearer guidance.
Bitwise’s move has forced other firms to reconsider their strategies. Grayscale Investments quickly followed suit, converting its private fund into an ETF using the same process. Other major firms, including VanEck, Fidelity, and Invesco, have also adjusted their filing strategies to reflect Bitwise’s approach. These firms are now racing to launch their own crypto ETFs, including those linked to Ripple’s XRP.
This rush highlights the importance of first-mover advantage in the ETF market. Ben Slavin, global head of ETFs at BNY, noted that capturing the early lead can be crucial. “Even a day’s advantage can determine who captures millions of dollars of fees,” he said. This competition for early market dominance is particularly intense as firms seek to secure a significant portion of the growing crypto ETF market.
The SEC’s government shutdown in October created an unusual regulatory environment for firms seeking to launch new products. Although the SEC allowed exchanges to adopt generic listing standards for crypto ETFs, many issuers still preferred the security of formal approval. The SEC’s guidance allowed products to go live during the shutdown, but issuers were cautioned about potential future intervention.
Despite this uncertainty, Bitwise chose to move forward with its Solana ETF launch. The company shifted its listing from Cboe to the NYSE to ensure a smoother launch. “It was important to bring BSOL to the world’s largest and most experienced ETP listing venue for a product this unique,” a Bitwise spokesperson explained. Other firms, such as Canary Capital, also proceeded with launches for spot Litecoin and Hedera ETFs on the same day.
The decision by Bitwise and other firms to push forward with crypto ETFs during the shutdown has led to mixed reactions within the industry. While some view it as a necessary risk to seize market share, others question the fairness of the process.
Regardless, the launch of Solana and other altcoin ETFs marks a clear departure from the SEC’s previous approach to approving Bitcoin and Ether ETFs. It remains to be seen how these developments will shape the future of crypto investments and regulatory practices.
The scramble to launch altcoin ETFs indicates growing confidence in the crypto market. However, the regulatory landscape remains a key factor in how this market will evolve in the coming months.
