The battle for the first spot exchange-traded fund (ETF) approval in the U.S. beyond Bitcoin and Ethereum is intensifying, with Solana (SOL) and XRP emerging as top contenders. Both assets are gaining momentum as regulatory sentiment shifts and market anticipation builds. With the Securities and Exchange Commission (SEC) taking key procedural steps, investors and analysts alike are closely watching which digital asset will cross the finish line first.
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Recent Regulatory Milestones Favor Both SOL and XRP
On February 6, a significant dual development occurred: the SEC officially confirmed Grayscale’s application to convert its Solana Trust into a spot ETF, setting a final decision deadline of October 2025. On that same day, four additional asset managers joined the growing list of firms filing for an XRP ETF.
Market sentiment, as reflected on prediction platform Polymarket, currently favors Solana, assigning it an 85% probability of ETF approval by 2025—slightly ahead of XRP’s 80%. While betting volumes remain modest—$65,761 on Solana and $34,748 on XRP—the trend suggests growing confidence in both assets’ regulatory viability.
For approval before July 31, 2025, traders have placed $207,980 on Solana with a 36% implied chance, while $102,069 has been wagered on XRP at a 40% probability. This short-term focus highlights investor eagerness for near-term clarity.
The landscape has dramatically shifted since the SEC approved the first spot Bitcoin ETF in January 2024, followed by spot Ethereum ETFs. These milestones established a precedent that major digital assets can meet regulatory standards if structured properly.
Changing Regulatory Climate Boosts Crypto ETF Prospects
The end of Gary Gensler’s tenure as SEC chair marks a turning point. His era was defined by aggressive enforcement actions against crypto firms, often criticized for stifling innovation without providing clear regulatory pathways. Now, under new leadership and a more crypto-friendly administration—President Donald Trump, inaugurated January 20, 2025—the regulatory tone is shifting toward clarity and support.
Reports indicate the SEC is reallocating 50 enforcement attorneys away from crypto cases, signaling a potential reduction in adversarial posture. This evolving environment increases the likelihood of favorable decisions on pending ETF applications.
Why Solana Could Win the ETF Race
Several factors position Solana (SOL) as a strong candidate for early approval:
- The SEC’s formal acceptance of Grayscale’s conversion request is a major procedural win.
- A decision deadline of October 2025 provides a clear timeline.
- Robust on-chain activity underscores Solana’s utility as a decentralized platform.
Over the past year, Solana has solidified its role as a leading blockchain for decentralized finance (DeFi) and memecoin trading, processing billions in transaction volume. This real-world usage strengthens its argument as a functional network rather than an investment contract.
“An asset whose primary purpose is utility—not investment—has a stronger case for being classified as a commodity,” said Yuriy Brisov, securities attorney at Digital & Analogue Partners. “That distinction is crucial for avoiding securities classification.”
However, challenges remain. The SEC’s ongoing litigation against major exchanges alleges that SOL is an unregistered security, creating internal conflict within the agency. If the enforcement division continues to treat SOL as a security, the division responsible for ETF approvals may hesitate to greenlight a spot product.
Analyst James Seyffart from Bloomberg Intelligence suggests this legal uncertainty could delay Solana’s ETF until 2026, despite strong market demand.
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Why XRP Still Has a Strong Edge
While Solana gains ground, XRP holds a unique legal advantage stemming from its landmark 2023 court victory over the SEC.
In July 2023, U.S. District Judge Analisa Torres ruled that XRP itself is not inherently a security. While institutional sales by Ripple qualified under the Howey Test, open market transactions did not. This partial win provided unprecedented regulatory clarity—something most other altcoins lack.
“XRP occupies a special place among altcoins due to this legal precedent,” said Vugar Usi Zade, COO of Bitget. “It has a level of U.S. legal clarity unmatched by peers like SOL or ADA.”
With a market cap exceeding $142 billion, XRP ranks fourth in the crypto market and boasts deep liquidity. Its global adoption in cross-border payments further supports its utility narrative.
Yet obstacles persist. The SEC has argued that Ripple’s influence over XRP introduces centralization concerns—clashing with the decentralized criteria used to justify Bitcoin and Ethereum ETFs. Although secondary market sales are legally cleared, Ripple’s ongoing role in distribution and development creates lingering uncertainty.
“Even with favorable rulings, the broader Ripple ecosystem remains under regulatory scrutiny,” Zade explained. “This could make the SEC cautious about approving an XRP ETF in the short term.”
Could Litecoin Surprise the Market?
While attention focuses on Solana and XRP, Litecoin (LTC)—launched in 2011—might be an unexpected frontrunner. According to Bloomberg’s James Seyffart, LTC’s long history, proven decentralization, and lack of major regulatory disputes give it a compelling case.
Unlike SOL or XRP, Litecoin has never faced enforcement action from the SEC. It also shares technical similarities with Bitcoin, often referred to as “digital silver” to Bitcoin’s “digital gold.” This alignment could make it easier for regulators to accept under existing frameworks.
Moreover, prior to Bitcoin’s ETF approval, a regulated futures market was seen as critical. Recently, CME Group briefly listed XRP and SOL futures on its website—only to remove them shortly after, calling it an error. Still, the incident sparked speculation about institutional interest.
If CME or another major exchange launches futures for LTC, XRP, or SOL, it could accelerate ETF approval timelines by demonstrating price transparency and resistance to manipulation.
Core Keywords:
- Solana ETF
- XRP ETF
- spot crypto ETF
- SEC approval
- cryptocurrency regulation
- Litecoin ETF
- Grayscale Solana Trust
- Polymarket predictions
Frequently Asked Questions (FAQ)
Q: What is a spot ETF, and why does it matter?
A: A spot ETF holds the actual asset—like Bitcoin or Solana—rather than derivatives. It offers direct exposure with lower complexity and counterparty risk, making it more attractive to mainstream investors.
Q: Has any altcoin received SEC approval for a spot ETF yet?
A: As of now, only Bitcoin and Ethereum have approved spot ETFs in the U.S. No altcoin—including Solana, XRP, or Litecoin—has cleared this hurdle.
Q: How does the SEC decide whether a crypto asset is a security?
A: The SEC applies the Howey Test: if an investment involves pooling money with an expectation of profit from third-party efforts, it may be deemed a security. Utility-focused assets with decentralized networks are more likely to be classified as commodities.
Q: Can XRP get approved even if Ripple is still under scrutiny?
A: Yes—but cautiously. The 2023 ruling separated XRP from Ripple’s actions. However, ongoing ties between the company and token could slow regulatory acceptance of an ETF.
Q: Why is futures market development important for ETF approval?
A: Regulated futures provide pricing benchmarks and help prevent market manipulation—key concerns for the SEC when evaluating spot ETFs.
Q: When might we see the first altcoin ETF approved?
A: Most analysts expect a decision on Solana or XRP by late 2025. Litecoin could emerge as a dark horse if regulatory conditions align.
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