Bitwise Head of Product Weighs in on Solana ETF Chances Amid Global Regulatory Landscape

Speaking exclusively to SolanaFloor, Chanchal Samadder discusses the obstacles to a Solana ETF in the U.S. and highlights leading crypto jurisdictions.

Finn Miller

Published: Sep 25, 2024 at 11:45

Following spot SOL ETF (Exchange Traded Fund) filings from TradFi giants like VanEck and 21Shares earlier this year, the possibility of approval has been on the tip of every network participant’s tongue.

While many Solana bulls are hopeful that a change of administration in the White House could lead to a SOL ETF approval, experts argue that there are bigger obstacles to overcome.

Chancal Samadder

In an exclusive interview with SolanaFloor, Bitwise Europe’s Head of Product & Capital Markets Chanchal Samadder shared his views on approval chances and the country's leading crypto regulation.

Absence of SOL Futures Market Still the Greatest Obstacle

Like many industry experts, Samadder believes the lack of SOL futures markets is the greatest barrier to SOL ETF approval. The majority of industry experts shares this consensus view, arguing regulators need to first evaluate the asset’s performance in CFTC-regulated futures before being eligible for a SOL ETF.

To illustrate this belief, Samadder drew comparisons to the earlier spot ETF approvals of Bitcoin and Ethereum.

“One of the critical factors was that it [Ethereum] had a regulated futures, CFTC regulated futures on the CME. I think for a Solana ETF in the U.S., you're probably going to need that, or some kind of change in regulation in terms of how you file these products with the regulator.”

Additionally, the role of SOL staking also needs to be considered. Samadder contends that educating regulators on the importance of staking is key to getting institutional adoption and approval across the line.

According to Samadder, regulators often consider staking as a yield generation strategy akin to lending, rather than an integral piece of Solana’s network and economic security. Educating regulators on the role staking plays in the ecosystem can demystify blockchain technology and alleviate regulatory concerns.

“What it's doing is actually helping secure the network, and that's the real reason for it. It's not actually lending. It's sometimes perceived like lending, and sweating the assets as much as possible. We've got to just change the mindset of it and make it think more about networks and security and what staking is actually trying to do.”

Who’s Leading Global Crypto Regulation?

While all eyes are on crypto ETF approvals in the U.S., other jurisdictions around the world have already launched a variety of ETP (Exchange Traded Products) leveraging SOL, including two SOL ETFs in Brazil.

While the rest of the world is arguably getting a significant start on crypto regulation, Samadder contends that the United States still plays a crucial role in the global regulatory landscape.

“It's very hard to ignore the U.S. because it is the largest pool of capital, traditional capital in the world. And everyone still looks to the U.S., to the U.S. financial institutions and the U.S. regulators to lead.”

Despite this view, Samadder concedes that the industry’s reliance on the U.S. to lead regulation and set a precedent for others to follow is something of a double-edged sword. By focusing primarily on the U.S., the industry often ignores the considerable advancements made elsewhere in the world.

“I do agree that sometimes it's a bit of an over-focus. And I think people don't, you know, sometimes don't see that in Europe, you know, the regulatory landscape is far more evolved and flexible in some ways, but still, you know, still very strict and it's done very well… I think there is an over-focus on the U.S. sometimes, but for right reasons, because it is the deepest and brightest pool of capital in the world.”

Currently, Samadder asserts that, in terms of frameworks, regions like the UAE and Europe are leading crypto’s regulatory landscape.