- Bloomberg crypto analysts Eric Balchunas and James Seyffart have projected optimistic approval odds for several cryptocurrency ETFs.
- The team places Litecoin ETF approval chances highest at 90%, with Dogecoin, Solana and XRP following in descending order of likelihood.
- The SEC’s classification of assets as either commodities or securities plays a crucial role in the approval process, with Litecoin and Dogecoin likely viewed as commodities.
- While ETFs can hold both securities and commodities, the regulatory uncertainty surrounding asset classification creates additional scrutiny for approval processes.
The Bloomberg crypto analyst all-star team has taken to X to sum up the standing of the altcoin exchange-traded fund (ETF) situation.
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And, according to the team consisting of Senior Analyst Eric Balchunas and fellow analyst James Seyffart, it’s looking like a pretty rosy future for these ETFs.
We’re putting out relatively high odds of approval across the board. Mainly focused on Litecoin, Solana, XRP, and Dogecoin for now.
James Seyffart, BloombergAnalyst Duo Weighs Up Chances of Next ETF Approval
The pair believes the highest odds of approval are for Litecoin (LTC), adding that there’s a high chance of Dogecoin (DOGE), Solana (SOL) and an XRP ETF approval soon.
Litecoin leads w 90% chance, then Doge, followed by Solana and XRP. We are only doing for 33 Act $IBIT-esque filings.
Eric Balchunas, Bloomberg
The analysts also said that while none of these are guaranteed to be approved, the chances are now much higher compared to if a Democrat were in the White House.
But, and this is sort of a big caveat, the US Securities and Exchange Commission (SEC) needs to first “untangle” the legal “mess” around XRP before there can be an XRP ETF.
The Old “It’s a Security, No, It’s Not” Game
As per Seyffart, the SEC, the agency overseeing ETF approvals, is “likely” considering LTC and DOGE to be a commodity, while HBAR and Polkadot (DOT) are a “maybe”.
According to the duo, the SEC doesn’t consider SOL and XRP to be a commodity.
Why would that matter?
ETFs can and do hold different assets, such as securities (think MicroStrategy shares) and commodities (for example in a gold ETF), but there’s a difference in how these get treated.
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Being a security does not mean an asset can’t be included in an ETF. In fact, as the RBA says, it can sometimes be even more complicated to package a commodity in an ETF, so at times, these trade as exchange-traded commodities – which are technically debt instruments.
Setting up exchange-traded instruments for commodities is slightly more complicated than is the case for equities. Regulation and the illiquid nature of many commodity markets mean that in some cases commodities cannot be structured in the same legal form as traditional ETFs.
Reserve Bank of AustraliaThe RBA says this is because “investment companies have a restricted range of assets in which they can invest and must also meet minimum requirements for diversification”.
However, it’s likely that uncertainty – especially in the United States – around what’s a security and what’s not creates greater scrutiny around the regulatory compliance of the underlying assets themselves.
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