“Slim Chances” for Solana and XRP ETFs: BlackRock Crypto Chief’s Viewpoint

• BlackRock’s Robert Mitchnick doubts ETFs for Solana and XRP due to insufficient maturity and liquidity.
• ETHStore’s Nate Geraci believes regulatory changes could introduce Solana and XRP ETPs in the U.S., inspired by Europe.
• Spot Ether ETFs face challenges with outflows, highlighting difficulties for new crypto investment products.

At the Bitcoin Conference 2024, Robert Mitchnick, BlackRock’s Head of Digital Assets, dismissed the prospect of Exchange-Traded Funds (ETFs) for cryptocurrencies like Solana (SOL) and Ripple (XRP). Mitchnick argued that these assets lack the maturity and liquidity required for ETF inclusion. This view stands in stark contrast to the predictions of ETHStore President Nate Geraci. Geraci believes that approval of a spot Ether ETF could lead to the introduction of more altcoin ETFs.

Mitchnick’s assessment hinges on the current market dynamics. Bitcoin dominates the crypto space with approximately 55% of the market cap, while Ethereum holds around 18%. In comparison, assets like Solana and XRP lag significantly behind, with their market shares being considerably smaller. This discrepancy, according to Mitchnick, indicates that these assets are far from meeting the thresholds required for ETF consideration. He argues that until these cryptocurrencies demonstrate greater maturity and liquidity, their chances of being included in an ETF remain slim.

Moreover, Mitchnick acknowledges that while crypto assets are here to stay, the path to more diverse ETF offerings is fraught with challenges. Despite the regulatory ambiguity surrounding digital assets, Mitchnick is confident that financial firms will continue to explore opportunities in the crypto sector. BlackRock, for instance, is actively working to maintain its competitive edge in this evolving market.

In contrast, Nate Geraci of ETH Store holds a different view. Geraci argues that Europe has already paved the way with ETPs for altcoins such as Solana, XRP, and Cardano. This development suggests that similar products could emerge in the U.S. market with the right regulatory adjustments. Geraci remains optimistic that regulatory changes could eventually facilitate the introduction of these products in the U.S., despite the current lack of clarity from the SEC.

However, the performance of recent crypto investment products, including spot Ether ETFs, has been underwhelming. These ETFs have experienced consecutive days of outflows, with products like Grayscale’s ETHE seeing significant losses. This disappointing performance highlights the broader challenges and uncertainties faced by new crypto investment products, adding complexity to the debate about the potential for altcoin ETFs in the U.S. market.