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Why is it so hard to wait for SOL ETF?

On June 27, according to the SEC's official website, VanEck submitted an application for Solana Trust. VanEck Solana Trust is an ETF, the first Solana ETF applied for in the United States. After the Bitcoin ETF and Ethereum ETF were approved this year, people have been discussing the next crypto ETF, and most people are optimistic about the SOL ETF.

How likely is it that Solana (SOL) will get its own ETF first after Ethereum (ETH) got its ETF?

When Ethereum announced its ETF, it saw an inflow of over $70 billion in one day, which is roughly equivalent to Solana's entire market cap.

If Solana were to get its own ETF, do you think we could see a similar effect?

Ebunker co-founder 0xTodd has always been pessimistic about the SOL ETF. In his latest tweet, he briefly discussed his personal views as follows:

I am pessimistic, mainly for the following reasons:

1. ETF fees are too low
2. $SOL market value is also low
3. There are few institutions/retail investors willing to hold SOL naked (Staked SOL APR is as high as 8%, while ETF is -0.2%).

The product of the three is probably not enough to cover the expenses of these ETF issuers.
If everything goes smoothly, it can be launched, but once there is great resistance later, it is likely to be withdrawn. After all, there is no motivation to promote it if it does not make money.

Ark BTC ETF ranks 4th with a market share of 6% (the top 3 are BlackRock, Grayscale and Fidelity). The fees of BTC ETF are relatively low compared to traditional ETFs, many of which are in the range of 0.19-0.25%, and ETFs are also competing in fees.

A simple estimate shows that with the current scale of Ark BTC ETF, it can earn about $7 million in management fees a year, so the corresponding cost is probably the same amount. Therefore, if Ark BTC ETF is still hovering near the profit line, then for Ark, forcibly launching ETH ETF may become a loss-making business. So even Ark can only reluctantly give up ETH ETF.

From a business perspective, mainstream coins with lower market value, such as $SOL, have a market value of 5% of $BTC. To recover the annual cost of $7 million, an ETF must manage at least 20 million SOL.

BlackRock, the current leader in crypto ETFs, only manages 1.5% of the BTC in the entire network, while 20 million SOL means 4.5% of the $SOL paper circulation.

Why is it difficult to wait for SOL ETF? -Because it may not make money.

The very low circulating market value requires a larger holding while bearing high interest rates and regulatory pressure. Therefore, if SOL has the current market value and circulation, it will be difficult for these institutions to make money.

In business, who has the motivation to promote unprofitable transactions?

In addition, the sticking point for Solana is security has to improve by an order of magnitude for institutional adoption. There’s way too many scams, wire fraud, securities fraud etc and there’s no way any institutional will get near that until a new crypto regulatory framework is in place.

So most of us think Solana is beyond crazy centralized and unless people stand up against the validators corruption an ETF is as good as dead in the water for Solana. If anything people should be more concerned about robinhood and the U.S. getting back on board with solana before even thinking about an ETF possibility.



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