Main Points
- The recent wave of ETF filings, including for Solana and XRP, is viewed as a strategic move anticipating a more favorable regulatory environment if Donald Trump wins the upcoming U.S. presidential election.
- Bloomberg Intelligence’s Eric Balchunas views these filings as “call options” that hinge on a potential pro-crypto shift in the SEC’s approach with Trump’s re-election.
- Should Trump secure victory, a libertarian-leaning SEC chairman could facilitate an easier regulatory path for crypto ETFs, unlike the current, more stringent SEC stance under Biden.
- Currently, ETF issuers are advancing filings for other cryptocurrencies like Solana, XRP, and Litecoin, aiming for approval.
- Trump’s stance contrasts with that of Vice President Harris, who has voiced a generally cautious, less overtly supportive stance on cryptocurrency.
- Historically, the Biden administration has implemented over 100 regulatory actions impacting the crypto industry through the SEC.
The Growing Interest in Crypto ETFs as a Political Strategy
With the U.S. presidential election approaching, cryptocurrency stakeholders, including ETF issuers, are actively aligning their strategies with potential shifts in political leadership. A notable increase in ETF filings for Solana (SOL) and XRP suggests that these issuers are placing a calculated bet on Donald Trump’s possible return to the White House. Bloomberg’s Eric Balchunas, a leading ETF analyst, argues that these filings are effectively “call options” on Trump’s victory, which could yield a more favorable regulatory framework for cryptocurrency.
A Political Perspective on Crypto ETFs
Eric Balchunas recently spoke at the Plan B Forum in Lugano, Switzerland, where he detailed how a Trump victory could drastically reshape the U.S. Securities and Exchange Commission (SEC). He predicts that Trump would appoint a more libertarian-oriented SEC chair, in stark contrast to the current head, Gary Gensler, known for his stringent stance on cryptocurrency regulation. Balchunas stated, “If Trump wins, he is likely to appoint a more crypto-friendly SEC chair.” This insight is key, as Balchunas hints that, should Kamala Harris win, the pro-crypto momentum may stall for years under the Democratic administration.
The ETF Filings for Solana, XRP, and Others
Following the groundbreaking approval of Bitcoin and Ethereum ETFs in the U.S. earlier this year, other digital assets, including Solana and XRP, are now pushing for similar validation. Notably, the Cboe exchange recently filed on behalf of VanEck and 21Shares for a Solana ETF listing. Meanwhile, Bitwise and Cannary Capital have submitted XRP ETF applications, with Cannary Capital also registering for a Litecoin ETF in mid-October. The expansion of these ETF applications signals issuers’ confidence in the future demand for altcoin-backed ETFs, despite current regulatory barriers.
Trump and Harris: Diverging Views on Cryptocurrency
The anticipated policies of Trump and Harris on cryptocurrency exhibit distinct differences. Trump has been outspoken about his intention to make the U.S. the “crypto capital of the world,” a statement that resonates with his broader agenda of financial innovation and deregulation. Conversely, Harris, while more supportive than President Biden, remains relatively quiet on crypto policy specifics. An October 14 report by Galaxy Research noted that Harris’s stance, while not antagonistic, is unlikely to match Trump’s level of enthusiasm and advocacy for the industry. Under Biden, the SEC has already pursued over 100 enforcement actions affecting crypto firms, an approach that crypto advocates hope will shift with a change in administration.
The SEC’s Regulatory Challenges for Crypto
Under Gary Gensler’s leadership, the SEC has maintained an aggressive regulatory posture toward the crypto industry, aiming to enforce traditional financial oversight on digital assets. This approach has placed considerable pressure on exchanges and crypto projects. Should Trump take office, his promise to dismiss Gensler from the SEC could lead to a significant reduction in regulatory challenges for crypto, potentially accelerating ETF approvals for assets like Solana, XRP, and Litecoin.
What Lies Ahead for Crypto ETFs?
The upcoming U.S. election could be a critical turning point for cryptocurrency regulation, particularly concerning the fate of altcoin ETFs. With issuers betting on Trump’s re-election, the next few months will likely see a continuation of high-stakes political and financial maneuvering within the crypto sector. Whether Trump’s potential victory materializes or Harris ascends, the outcome will profoundly impact crypto’s trajectory within U.S. markets, influencing ETF approvals, regulatory stances, and investor sentiment toward digital assets.
