- Brazil approves a second Solana ETF.
- This comes two weeks after the first one.
- Brazil’s Solana ETFs serve as examples in other countries.
Exchange-traded funds (ETF) are a key vehicle for institutional crypto investment. This is because they offer a regulated way for institutional investors to gain exposure to crypto assets. Investors can access Bitcoin and Ethereum ETFs in most jurisdictions, including the US. However, Solana investors hope this could change.
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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.
Brazil Goes Forward With Solana ETFs
Solana ETFs have made 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, and details about its public offering and listing will be announced.
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, ETFs offer a more accessible way to gain crypto exposure.
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.
ETFs significantly lower the entry barrier for crypto investors but are hesitant about managing digital assets directly. Institutional investors face regulatory, technical, and risk challenges when dealing with exchanges.
Regulators in multiple jurisdictions, including the United States, consider the sale and management of crypto assets to be 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 world’s capital. Crypto investors, including Solana, 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 its clients have limited demand for Solana ETFs.
- 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 retail and institutional investors to invest in SOL. This can potentially attract a larger base of investors and enhance Solana’s liquidity and stability.
Read more about Solana ETF chances in the US:
Is a Solana ETF Coming Soon, or Is It a Distant Dream?
Read more about VanEck’s take on Solana ETF chances:
VanEck Pins Solana ETF’s Favor on Obscure 2018 Ruling
