JP Morgan: SEC Crypto Shift May Usher in Solana, XRP ETPs

Solana and XRP could be next in line for spot cryptocurrency exchange-traded products, though analysts expect more modest asset inflows compared to bitcoin's success, according to a new J.P. Morgan Research report.

The anticipated regulatory changes in 2025, including a new Securities and Exchange Commission chair and potential legislation clarifying crypto asset classification, could pave the way for the next wave of cryptocurrency ETPs—though J.P. Morgan analysts Kenneth B. Worthington, Michael Cho, Alexander Bernstein and Madeline Daleiden cautioned that investors demand for these “altcoin” products may be limited compared to bitcoin and Ethereum offerings.

After the successful launch of bitcoin ETPs that gathered $36.5 billion in their first year, J.P. Morgan estimates potential Solana ETPs could attract $3 billion to $6 billion in assets, while XRP products might draw $4 billion to $8 billion, according to the report published Monday.

These more modest projections reflect the smaller market capitalization of these tokens compared to bitcoin and Ethereum, the report noted, with Ethereum’s market cap roughly three to four times larger than both Solana and XRP.

Several firms have already positioned themselves for potential approval, with Grayscale operating a $99 million Solana trust and a $12 million XRP trust that could convert to exchange-traded fundss, similar to its previous bitcoin trust conversion, according to the analysts.

Regulatory Environment Is Key to Innovation

The report indicates multiple ETP applications for tokens like Solana have already been rejected by the current SEC, but firms may resubmit under new leadership that could take a more favorable stance toward crypto innovation.

The new regulatory environment appears crucial for future approvals, the analysts write, as debate continues at the SEC around what constitutes a security versus a commodity—a key distinction that has delayed "altcoin" ETP applications.

“Outside of a few primary tokens (i.e BTC, ETH, SOL), the episodic nature of the cryptomarket is driven by varying investor sentiment and trendy new coins that may capture incremental attention for a limited time,” the report stated.

BlackRock Inc.’s decision not to pursue a Solona ETP due to uncertain investor demand highlights the challenges ahead, the analysts said, suggesting the broader crypto market’s breadth may outweigh individual token depth beyond the largest cryptocurrencies.

The report suggested the recently approved bitcoin and Ethereum hybrid ETP products from Franklin Templeton and Hashdex, possibly set to launch this month with an 80/20 split matching market caps, could provide a template for future multi-token products.