The sluggish market that has experienced a waterfall finally received a shot in the arm. On March 2, local time in the United States, Trump posted on social media, After years of suppression by the Biden administration, the U.S. cryptocurrency reserves will enhance the status of this key industry, which is why my digital asset executive order instructs the Presidential Task Force to advance strategic reserves of cryptocurrencies including XRP, SOL, and ADA. I will ensure that the United States becomes the worlds cryptocurrency capital. We are making America great again! Obviously, BTC and ETH and other valuable cryptocurrencies will be at the core of the reserves. I like Bitcoin and Ethereum, too!
The effect of Trumps call was immediate. BTC and ETH both rebounded by more than 10%, SOL rose by more than 20%, ADA rose by more than 70% to become the eighth largest cryptocurrency by market value, and XRPs full circulation market value surpassed Ethereum for the first time. The total market value of cryptocurrencies rebounded by 9% to 3.25 trillion US dollars.
With Trumps announcement of the US Cryptocurrency Strategic Reserve plan, the most cryptocurrency-supportive US Congress in history was born. As a channel for traditional funds to flow into the crypto ecosystem, the SECs attitude towards crypto assets has also shifted from strong regulation to friendly. Last month, the SEC confirmed that several traditional US giants had applied for ETFs for LTC , DOGE , SOL and XRP . According to statistics from Bloomberg analysts James Seyffart and Eric Balchunas , the current market has a relatively high probability of approval for LTC, DOGE, SOL and XRP spot ETFs. The markets expectations for other mainstream crypto asset ETFs to be launched in the US capital market have significantly increased.
Related reading: A quick look at the latest progress of multiple crypto ETFs: SEC review is accelerating, SOL and LTC are leading the way
The latest altcoins that the SEC has confirmed ETF applications
Looking back at the development of crypto ETFs, this process can be described as twists and turns. After at least 30 Bitcoin spot ETF applications were rejected in the past 10 years, the market finally ushered in the official approval of the US Bitcoin spot ETF on January 11, 2024. On July 23 of the same year, the crypto market once again ushered in a historic moment, and the SEC (U.S. Securities and Exchange Commission) officially approved the Ethereum spot ETF. 2024 can be said to be the first year of crypto ETFs. Bitcoin and Ethereum are also the only two crypto ETFs that have been confirmed to be approved so far.
From this point of view, such a dense positive last week is rare, and it also sends an important positive signal to the entire crypto market. If these ETFs are eventually passed, they will bring huge potential opportunities for these underlying assets and the entire cryptocurrency market. Investors will be able to enter the market more easily, driving a large amount of capital inflows, thereby enhancing the depth and stability of the market.
The following is an analysis of the altcoins whose ETF applications have been recently confirmed by the SEC, covering the expected approval probability, regulatory compliance assessment basis, application progress, and market data from the past 30 days, sorted from high to low by Bloomberg analysts forecasts of regulatory approval rates.
LTC (Litcoin)
ETF approval probability: 90%, it is considered by the SEC to be a clone of Bitcoin, has decentralized features, and is likely to be identified as a commodity. It is currently the altcoin with the most advanced approval progress .
Currently, Grayscale and Canary Capital have submitted applications for LTC spot ETFs, and the SEC has accepted them. Bloomberg analyst Eric Balchunas said that he believes Litecoin will become the next crypto spot ETF approved by the SEC.
DOGE (Dogecoin)
Probability of ETF approval: 75%. It is considered by the SEC to be a clone of Bitcoin and Litecoin and will most likely be identified as a commodity.
Currently, two institutions have submitted applications for DOGE spot ETFs, namely Grayscale and Rex, and the SEC has accepted them.
SOL (Solana)
Probability of ETF approval: 70%, currently the SEC still considers it as a security.
Currently, five issuers have submitted spot Solana ETF applications, namely Grayscale, Bitwise, VanEck, 21 Shares and Canary Capital, and the SEC has accepted them all. This is the first time that the SEC has recognized an ETF application for a token that was previously called a security.
XRP (Ripple)
Probability of ETF approval: 65%, mainly affected by SEC litigation and the need to resolve regulatory disputes.
Currently, Grayscale, Bitwise, Canary Capital, 21 Shares and Wisdomtree have applied for XRP spot ETF. Perhaps affected by the previous lawsuit, only Grayscales application has been accepted by the SEC.
Related reading: A quick look at the latest progress of multiple crypto ETFs: SEC review is accelerating, SOL and LTC are leading the way
How is the Ethereum ETF performing now after its approval?
Ethereum ETF officially landed in the U.S. capital market on July 23 last year, with the price of Ethereum at around $3,200 on that day. Market data shows that the net inflow of Ethereum ETF since its launch about half a year ago is $2.82 billion, which is equivalent to Wall Street buying nearly 1% of the volume of Ethereum, while Ethereum has now fallen to around $2,500.
On the one hand, this is because Grayscale has been continuously selling the Ethereum ETF and has become the largest seller in the market, thus hindering the rise of Ethereum; on the other hand, Ethereum is more seriously affected by the selling of giant whales than Bitcoin, and Ethereum is currently still digesting the potential selling pressure from giant whales.
But the good news is that World Finance Liberty, a Trump-related entity, is continuously increasing its holdings of Ethereum. The net inflow of ETFs and the continuous purchases by Trump-related institutions show the attitude of long-term investors towards Ethereum in a market environment where policies are becoming more and more open.
By analogy, if the ETFs of LTC, DOGE, SOL, and XRP are approved in 2025, although ETFs in this category will become an inflow window for traditional funds, it does not mean that these tokens will show a trend of sharp increases.
Crypto ETF 2.0 Under Trump
Looking at the history of crypto ETFs, it is not difficult to see that Trumps return to the White House this year is a major boon to the entire market. Bloomberg analyst Eric Balchunas pointed out that before Trump won the election, the approval probability of all assets except Litecoin remained below 5%. It is expected that as the application enters the approval process and the SECs decision deadline approaches, the approval probability of cryptocurrency ETFs will continue to rise.
Related reading: Coinbase 2025 Outlook: More Crypto ETFs Will Appear; Stablecoins Are Still the Killer App
So the question is: Why was the process of crypto ETF so difficult before? This has to start with the SECs characterization of cryptocurrencies.
Cryptocurrency: Is it a security or a commodity?
In fact, as early as 2014 , the debate over whether cryptocurrencies should be defined as securities at the legal level had begun to emerge.
That year, the Ethereum networks sponsors sold 60 million ethers to fund the development of the network, which officially launched a year later. Because of its similarity to traditional common stock initial public offerings (IPOs), Ethereums ICO raised a fundamental question: Do crypto assets meet the definition of securities under U.S. federal securities laws?
To this day, this question remains an important criterion for whether a cryptocurrency ETF can be approved by the SEC. Its answer not only determines whether and how crypto assets can be sold to the public, but also whether we must hold and trade these crypto assets according to the current rules and market structures established for securities over the past 80 years.
At the heart of this debate is the Howey Test, which stems from the U.S. Supreme Court’s 1946 SEC v. Howey case. Howey Company leased citrus groves and promised to manage the land and sell the fruit, in exchange for a share of the profits. The SEC won the case because the market regulator believed that these contracts met the definition of securities.
As a result, the famous Howey Test was born and became an important standard in the US securities law framework for determining whether a transaction constitutes a security. Its core logic revolves around four elements: First, investors need to invest money or assets with monetary value (such as cash, cryptocurrency, physical objects, etc.), that is, investment of money; second, these funds must be pooled into a common enterprise, that is, the investors income is closely related to the success or failure of the overall operation of the project, rather than operating independently; third, the core motivation of investors participation must be based on expectation of profit, that is, its purpose is to obtain economic returns through investment, rather than simply using products or services; finally, the realization of profits must mainly rely on the efforts of others, that is, investors do not directly participate in business management, but rely on the decision-making and operational activities of third parties (such as project teams, promoters) (such as the value of tokens depends on team development rather than user mining). These four elements are interrelated and together constitute the definition standard for whether an investment contract is a security. Especially in the field of cryptocurrency, if the project party fails to circumvent the above conditions, it may face the legal risk of being identified as an unregistered security.
In the Howey Test, the four conditions mentioned above must be met at the same time. If one of them is missing, the transaction does not constitute a security. This standard can be said to provide compliance guidance for cryptocurrencies: if a project wants to circumvent the identification of securities, it must break at least one of the conditions, such as emphasizing decentralization or user-initiated contributions.
In terms of actual cases, the SEC has stated that Bitcoin and Ethereum are sufficiently decentralized and therefore do not meet the fourth condition, so they are not securities. Institutional sales of XRP are judged to be securities, and the Ripple currency circulating in the secondary market is a commodity.
As of now, Bitcoin and Ethereum have been recognized as commodities . Litecoin has a high probability of approval because it is a PoW model like Bitcoin, and the Dogecoin protocol is a clone of the Litecoin protocol, which is a clone of the Bitcoin protocol , so it is also likely to be recognized as a commodity. The issue of the classification of the attributes of Solana and Ripple has not yet been determined, especially with the pending lawsuit between XRP and the SEC .
If you are interested in learning more about the tug-of-war between crypto projects and the SEC and more detailed judgment criteria, you can take a look at several famous cases: Why are these five tokens securities? The SEC gives the answer and ConsenSys fights back against the SEC point by point, why Ethereum is not a security.
What impact will it have on the crypto market?
Bloomberg analysts expect the SEC to make a decision on the proposed altcoin ETF in October this year. It can be foreseen that if altcoin ETFs are approved one after another, various favorable factors in the future will most likely continue to attract more conservative and institutional investors to participate, thereby changing the investor structure of the market. The crypto market may experience increased liquidity, price increases, and changes in investor structure under this policy environment. Therefore, the passage of more ETF products will also bring more funds to the crypto market, enhance market liquidity, and thus reduce price volatility.
In addition, due to the existence of regulatory arbitrage, the ETF launched by the United States may directly lead to imitation by other countries and regions in the world. This imitation may promote the popularity of cryptocurrencies around the world to varying degrees, especially in regions with looser regulations, where the adoption of cryptocurrencies will usher in more rapid growth. Global policy convergence can not only effectively reduce the compliance costs of cross-border transactions, but also further eliminate investors concerns about legal risks, thereby promoting the participation of more institutions and individuals. This trend may accelerate the transformation of cryptocurrencies from marginal assets to mainstream financial instruments, and promote their rising status in the global economy.
As the Trump administration further supports the crypto industry, U.S. states gradually introduce strategic bitcoin reserve legislation , and Republicans control both the Senate and the House, Congress may have the opportunity to pass cryptocurrency-related bills. Once the legislation is passed, cryptocurrencies may be expected to become a new asset class that is neither a security nor a commodity, which will be of epoch-making significance to the crypto market.
Where will crypto ETFs go this year?
The following are predictions from industry organizations and KOLs on the development of crypto ETFs in 2025 (the original text is compiled from ChainCatcher , 2024 Crypto ETF Panorama: Asset Size Exceeds US$120 Billion; From Margin to Mainstream ):
Forbes predicts that the Ethereum ETF may integrate the staking function for the first time. At the same time, spot ETFs for mainstream tokens such as Solana are expected to be launched at an accelerated pace, and weighted crypto index ETFs may appear to cover a wider range of assets.
Research firm Messari emphasized that with the positive flow of funds for Grayscales GBTC, the launch of the spot Solana ETF in the next one or two years is almost inevitable, and the overall inflow of funds into the ETF will continue to rise.
Coinbase believes that although issuers may try to include more tokens such as XRP, SOL, LTC, HBAR, etc. in the ETF asset range, such expansion may only have actual benefits for a few tokens.
ETF issuer VanEck proposed a more specific regulatory outlook, predicting that the new leadership of the US SEC or CFTC will approve multiple spot cryptocurrency ETPs, including VanEck Solana products. At the same time, Ethereum ETP may improve its practicality by supporting staking functions, and both Bitcoin and Ethereum ETP may adopt physical creation/redemption mechanisms. If SEC rule SAB 121 is repealed, it will also promote traditional financial institutions to participate deeply in cryptocurrency custody.
Another issuer, Bitwise, is optimistic about the Bitcoin ETF and predicts that the scale of capital inflows in 2025 will exceed that in 2024, attracting trillions of dollars of institutional funds.
Overall, many institutions predict that cryptocurrency ETFs will see significant development in 2025. Diversified innovation of ETF products, regulatory adjustments and the entry of mainstream funds will become the core driving force of the crypto market in the next two years.
