Solana is expected to become the third popular ETF, but regulatory challenges remain.

A recent survey shows that after Bitcoin and Ethereum, 63.6% of respondents believe that Solana ( SOL ) will be the next encryption currency to trigger an ETF boom.

This result is not a coincidence. Since the approval of the Ethereum ETF, the market's attention to SOL has significantly increased. Several industry insiders have expressed their views on this:

• A foreign exchange and digital asset research director at a bank predicts that various Crypto Assets ETFs, including SOL, may be approved in 2025.
• The founder of a capital company stated that they will be ready for the SOL ETF.
• The CEO of an investment company pointed out in a television program that SOL may become the target of the next Crypto Assets ETF.

The main reason Solana is receiving widespread attention is its high market capitalization. From this dimension, among mainstream crypto assets, SOL indeed has a greater potential.

However, the biggest obstacle facing Solana is its regulatory positioning. In June 2023, the U.S. Securities and Exchange Commission (SEC) classified SOL as a security in two lawsuits. This classification makes it difficult for SOL to obtain ETF approval in the short term.

Being classified as securities means that stricter regulatory requirements must be followed, including registration, disclosure, and potential trading restrictions. This significantly increases the difficulty of launching ETFs. In addition to SOL, there are 17 other Crypto Assets that have been classified as securities in the aforementioned lawsuit, and they face similar challenges.

It is worth noting that the FIT21 bill passed on May 22, 2024, brings new hope to the industry. The bill clarifies two types of digital currencies and their regulatory bodies:

1. Decentralized tokens are defined as digital goods regulated by the Commodity Futures Trading Commission (CFTC).
2. Non-decentralized tokens are considered securities and are regulated by the SEC.

The bill also defines decentralization, including conditions such as no single entity being able to control the entire blockchain network, and no one owning more than 20% of the digital assets or voting rights.

The advancement of the FIT21 bill may pave the way for more cryptocurrency ETFs. However, whether SOL can become the third approved ETF cryptocurrency also depends on the progress of the bill in the Senate and how "digital commodities" and "securities" are ultimately defined.

Despite currently facing challenges, considering the variability of the U.S. regulatory attitude, SOL still has the potential to become an ETF target within the next one to five years. This process will depend on the legislative progress of the FIT21 bill and its specific implementation rules.