If you've been keeping an eye on the cryptocurrency ETF scene, you might have noticed that since the approval of the first BTC ETF, the number of crypto ETF applications has been increasing day by day. As of this year, the number of institutional crypto ETF filings has reached 72, covering stablecoins, Memecoins, and various ecosystems, including but not limited to Solana, XRP, Litecoin, Dogecoin, and even the latest meme trends like Trump and Pudgy Penguins.
The entities behind these ETF applications include top-tier institutions like Grayscale, Bitwise, and Franklin Templeton, indicating that the potential capital power of crypto ETFs is enormous. Once approved, these ETFs will open up a vast gateway for cryptocurrency investment in the traditional financial world.
Let’s Address the Real Question: Why Are Institutions Suddenly Flocking to Apply for ETFs?
The answer is simple: The core reason is that institutions are gradually realizing that the crypto market is no longer just a "sandbox" for retail investors. It’s a rapidly maturing, fund-active, and fast-growing investment arena. According to current data, these ETFs collectively manage over $100 billion in assets, showing a strong interest from both institutional and retail investors in crypto assets.
Another key point is the approval of spot BTC and ETH ETFs, which signals a shift in regulatory stance and marks the official opening of a channel for traditional financial capital to enter the crypto market. This acts as a “floodgate” signal, prompting institutions like Grayscale, Bitwise, and Franklin Templeton to jump in. Nobody wants to miss the next gold rush.
So, What’s the Next Big ETF Opportunity? Mainstream Coin ETFs? Altcoin ETFs?
There’s no need to discuss mainstream coin ETFs, especially with the precedent of BTC and ETH. Today, we’ll focus on the question: Do altcoin ETFs still have a chance?
How Likely Is an Altcoin ETF?
If you think “altcoins” are just synonymous with unreliable projects, you might still be stuck in the 2017 phase. Nowadays, many altcoins are no longer just projects with a new logo or name aiming to deceive retail investors. Many of them are backed by real technology, real users, and real ecosystems, and in certain verticals, they even surpass Ethereum.
For instance, Solana has repeatedly outpaced Ethereum in terms of on-chain activity.
For instance, XRP has been a staple in cross-border payments.
For instance, Memecoins like PEPE, Trump, and Pudgy Penguins have seen ever-increasing trading volumes.
So, do these coins qualify for ETFs? The answer is: They already qualify! The key question now is: Will the regulators allow them?
Challenges of Altcoin ETFs from a Regulatory Perspective
Although BTC and ETH have already been classified as "not securities," other cryptocurrencies are still in a "pending" status. The SEC's stance has been highly uncertain, especially after Trump took office, as the changes in the SEC leadership have brought many uncertainties.
Thus, whether an altcoin ETF can be approved depends on a few key factors:
Does it have a clear non-security classification? For example, XRP has been battling the SEC for a long time, but the court has ruled that it’s not a security on the secondary market, which is significant.
Does it have sufficient market capitalization and liquidity? After all, an ETF that only trades a few million dollars a day won’t be attractive to institutions.
Does it have a reliable custody solution for spot holdings? Institutional funds require regulated custody, not just storage on a small exchange.
Is it sufficiently compliant and transparent? This includes whether token distribution is fair, whether there’s potential manipulation, and whether the team has a clean history.
In other words, the altcoins that have a genuine shot at an ETF are the “semi-mainstream coins” — like Solana, XRP, LTC, and DOGE — which have solid consensus and compliance frameworks.
Why Are Altcoins Like Solana, XRP, LTC, and DOGE More Likely to Get an ETF Than Others?
From a regulatory standpoint, there are three primary reasons why altcoins like Solana, XRP, LTC, and DOGE have a better chance of getting an ETF approval than others.
1.The SEC's Basic Stance: Default to Securities, Unless Proven Otherwise
This phrase sums up the SEC’s attitude toward most crypto assets. The SEC’s core inquiry is: “Is this thing a security?”
If it is, it must adhere to the Securities Act, which involves various restrictions, including registration, disclosure, investor eligibility, and periodic reporting. Most crypto projects are decentralized, open-source, and globally circulated, which conflicts with traditional securities logic.
So, the SEC has adopted a “default adversarial” strategy — you need to prove you're not a security. This brings us to the crucial Howey Test, which determines whether an asset is an “investment contract” (i.e., a security). The test has four conditions:
Money is invested.
The investment is part of a common enterprise.
Investors expect to profit.
Profits come primarily from the efforts of others.
The reason BTC and ETH passed is that they have a decentralized consensus, no fundraising history, and have evolved far beyond centralized teams. But how can an altcoin that’s only six months old, with a development team and a token distribution mechanism, prove it’s “not a security”?
2.Regulatory Weakness in Many Altcoin Projects
From another perspective, many altcoins have “issues”:
Non-compliant Token Distribution: Many projects raise funds through ICOs (Initial Coin Offerings) directly to retail investors without KYC or accreditation checks, which the SEC would consider an illegal securities offering.
Lack of Sufficient Disclosure: Traditional securities markets require rigorous disclosure. But many crypto projects lack basic information, like who the team members are, whether the code is open-source, and whether they’ve undergone financial audits.
Price Manipulation: Altcoin markets often suffer from low liquidity, whale dominance, and high volatility. SEC is concerned that allowing ETFs for such assets could result in large, unpredictable swings that harm unsuspecting investors.
3.Structural Challenges Altcoin ETFs Face
Even if some altcoins are relatively “clean,” they still face three significant regulatory hurdles when applying for an ETF:
Price Discovery Transparency: The SEC looks closely at whether an ETF’s underlying assets have a reliable, transparent, and auditable spot price. Bitcoin’s ETF was approved because major exchanges like Coinbase, Kraken, and Bitstamp provide data that feeds into reputable price discovery institutions like NASDAQ and CME. Many altcoins, however, rely heavily on just a couple of small exchanges, which the SEC won’t accept.
Lack of Custody Solutions: ETFs require asset custodians and liquidity providers. While Bitcoin and Ethereum have compliant custodians like Coinbase Custody and BitGo, most altcoins lack such providers, making it impossible to launch ETFs.
Liquidity and Market Depth: ETFs need reliable liquidity to match the ETF’s price and net asset value. Many altcoins simply don’t have the trading volume or market depth required to support a reputable market maker. Without liquidity, ETFs can’t function.
Which Coins Might Be the Next to Get an ETF?
Here are a few altcoins that might have a shot at an ETF:
Solana: With high trading volume, fast transaction speeds, and an ecosystem that increasingly resembles Ethereum’s, Solana has a strong foundation. If US regulations loosen, Solana’s SOL ETF could lead the charge.
XRP: XRP’s court ruling that it’s not a security is a huge win. Ripple’s early efforts in compliance and its focus on cross-border settlements make it highly attractive to financial institutions, giving XRP a good chance for an ETF, especially with backing from firms like Grayscale and Bitwise.
LTC and DOGE: These coins may not be as innovative but have large, stable user bases and substantial trading volume. With simple tokenomics and minimal regulatory friction, they are likely to pass through the SEC’s scrutiny.
Trump and Pudgy Penguins (Memecoins)?: While seemingly far-fetched, these coins are more like crypto versions of cultural ETFs. Given their community-driven nature and massive media appeal, the SEC might eventually classify them as digital commodities, which would open the door for ETFs. After all, Americans are experts at financializing just about everything, including basketball cards and fast-food loyalty points.
Conclusion: What Does the Crypto ETF Rush Mean for Investors?
"Crypto Assets Coming Into the Spotlight"
"Massive Liquidity from Traditional Finance"
"Altcoins Are Back in the Narrative"
The next bull market could very well be driven by altcoins that meet regulatory standards, present clear compliance narratives, and have strong communities behind them.
Disclaimer: This article offers an objective analysis of the crypto market and does not constitute investment advice.
