Solana, Cardano and other crypto assets have a slim chance of being approved as spot exchange-traded funds (ETFs) in the United States and could have an even more difficult time attracting investors.

Speaking to Cointelegraph, Katalin Tischhauser, head of investment research at Sygnum Bank, joined a recent string of commentators who expressed skepticism that other altcoins can follow Ether ( ETH ) and Bitcoin ( BTC ) as spot crypto ETFs in the United States. 

Tischhauser said the main obstacle to approving other crypto ETFs in the US is the lack of trading venues that the Securities and Exchange Commission considers acceptable for market surveillance.

The SEC has a duty to ensure that they protect against market abuse, fraud and market manipulation, so for products that it approves, it surveils the underlying market by looking at regulated market venues, such as the Chicago Mercantile Exchange (CME), to ascertain that the trading practices are fair, transparent and free from manipulation, Tischhauser explained.

“The availability of CME futures for Bitcoin and Ethereum was a workaround.”

The SEC requires regulated market venues to assess market integrity but currently views crypto exchanges as “unregulated securities exchanges.”

If these issues are resolved and the SEC accepts crypto exchanges such as Coinbase as surveillance markets, it could lead to the creation of more crypto ETFs.

Demand even tougher

Even if approved, Tischhauser believes that there wouldn’t be much demand for altcoin ETFs.

“We do not think ETFs beyond Bitcoin and Ethereum would meet much demand. Ethereum’s name recognition is only half of Bitcoin’s, and other tokens (such as Solana) have minimal name recognition outside the crypto market.”

Since their launch in January, spot Bitcoin ETFs have generated an aggregate of $17.7 billion in inflows,  indicating clear demand for the asset class, with the new ETFs outperforming other major asset funds.

Spot Ether ETFs have had a slower start, with aggregate outflows dominating the first week of trading. However, this was largely expected due to the exodus from the Grayscale Ethereum Trust.

Tischhauser suggested the market could look very different for cryptocurrencies outside of Bitcoin and Ether ETFs.

Tischhauser noted the high premium on Grayscale’s Solana Trust (GSOL) indicates some demand but also stressed that its assets under management are significantly smaller compared to its Bitcoin and Ethereum trusts, suggesting limited overall interest.

2 reasons Solana and other altcoins ETFs may struggle — Sygnum Bank image 0 BlackRock's Samara Cohen speaking on alternative spot crypto ETFs on July 29. Source: Bloomberg 

The GSOL fund currently has just $78.6 million in assets under management, which is around 1.2% of its Ethereum Trust (ETHE), which still has $6.3 billion in AUM despite the ongoing exodus.

This lack of demand for altcoin ETFs was also expressed by BlackRock’s investment chief for ETF and index investments, Samara Cohen, as well as the asset manager’s head of digital assets, Robert Mitchnick, in July .

Cohen noted that there is unlikely to be a spot ETF for altcoins such as Solana’s in the near term, while Mitchnick said, “I don’t think we’re gonna see a long list of crypto ETFs.”

VanEck’s head of crypto research disagrees

Not all are as bearish about other altcoin ETFs. 

In a July 31 interview, VanEck’s head of digital assets research, Matthew Sigel, said: “We disagree with the notion that Bitcoin and Ethereum will be the only ETFs. The market in Europe already boasts a variety of crypto ETPs, including single coin and basket options.”

Related: Ethereum ETFs could reach $10B AUM in first year: Sygnum Bank

“We aim to lead this innovation in the US as well,” he added. VanEck filed for a Solana ETF with the SEC on June 27.

2 reasons Solana and other altcoins ETFs may struggle — Sygnum Bank image 1 Cumulative flows for spot ETH ETFs. Source: Farside Investors

Aggregate flows for spot Ether ETFs flipped positive again on Aug. 1, with Grayscale’s ETHE fund seeing its smallest outflow so far, with $78 million leaving the product, bringing the total aggregate inflow to $28.5 million on the day.

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