Solana Gains Ground With Brazil’s Latest ETF Approval
This comes two weeks after the first one.
Exchange-traded funds (ETF) are seen as a key vehicle for institutional crypto investment. This is because they offer a regulated way for institutional investors to gain exposure to crypto assets. In most jurisdictions, including the US, investors mostly have access to Bitcoin and Ethereum ETFs. However, Solana investors hope this could change. Sponsored
Recently, Brazil has been making headlines with its proactive support for Solana ETFs. This includes the upcoming listing of its first Solana-based ETF on the B3 exchange and the regulatory approval of a second.
Solana ETFs have gained progress in Brazil recently. On Wednesday, August 21, a second Solana ETF, managed by Hashdex, received the green light from the Brazilian Securities Commission (CVM). This ETF is currently in the pre-operational phase, with details about its public offering and listing to be announced.
Source: CVM
This comes roughly two weeks after Brazil’s regulator approved its first Solana ETFs. This fund, launched by crypto-focused fund QR Assets, will be managed by administrator Vortx.
These developments highlight Brazil’s approach to integrating its financial sector with emerging technology. For institutional investors, in particular, ETFs offer a more accessible way to gain exposure to crypto.
Why Institutions Want to Invest in Crypto ETFs Like Solana’s
For most investors, crypto ETFs don’t make sense. Their performance is typically lower than that of the underlying asset. Moreover, traders have to pay management fees. In the case of Solana ETFs, the funds trade far above the underlying asset value, as much as 7x. This exposes investors to a potential correction. Despite this, ETFs make sense for major institutional investors. Sponsored
ETFs significantly lower the barrier to entry for investors interested in crypto but hesitant about managing digital assets directly. For one, institutional investors face both regulatory and technical challenges and risks in dealing with exchanges.
Regulators in multiple jurisdictions, including the United States, consider the sale and management of crypto assets as unlicensed securities trade. On the technical side, institutions are exposed to hacks and irreversible human errors. Holding assets on a crypto exchange, introduces a counter-party risk, as seen in the collapse of FTX.
For this reason, ETFs open up crypto investment to firms that hold the majority of the capital in the world. This is why crypto investors, including Solana’s hope for a positive price impact from their approvals.
On the Flipside
Several institutions have suggested that Solana ETF approvals might have a limited impact on the price of SOL. For instance, BlackRock suggested that there is limited demand for Solana ETFs among its clients.
Earlier, hopeful Solana ETF issuer VanEck’s manager explained that an earlier ruling in the US could pave the way for Solana ETFs.
Why This Matters
The launch of Solana ETFs provides a regulated pathway for both retail and institutional investors to invest in SOL. This can potentially bring a larger base of investors to Solana, enhancing its liquidity and stability.
Read more about VanEck’s take on Solana ETF chances: VanEck Pins Solana ETF’s Favor on Obscure 2018 Ruling
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