ETF policy: whether ETH, SOL or other assets could follow BTC ETFs

Explore the ETF policy debate—can ETH, SOL and other crypto assets launch Bitcoin-style ETFs? Understand regulatory hurdles, market impact and investor implications.

• Bitcoin’s first spot‑ETFs opened a new window for institutional crypto exposure.
• Regulators are debating whether to allow similar products for Ethereum, Solana and beyond.
• The outcome will reshape how retail investors gain diversified crypto access.

In 2025 the crypto market stands at a crossroads. Bitcoin’s spot‑exchange‑traded funds (ETFs) have finally been approved by U.S. regulators, giving institutional money managers a regulated conduit to invest in BTC without holding the underlying asset directly. Now, industry analysts and investors alike are asking: ETF policy: whether ETH, SOL or other assets could follow BTC ETFs. The question is not just about product design but also about regulatory philosophy, custody logistics, and market maturity.

This article examines the current regulatory landscape, how crypto ETFs work, what the potential benefits and risks are for retail investors, and why the answer matters now. We’ll also look at real‑world tokenized assets—using Eden RWA as a concrete example—to illustrate how on‑chain investment vehicles can coexist with traditional ETF models.

Background: The Rise of Crypto ETFs

ETF stands for Exchange Traded Fund, an investment vehicle that tracks the performance of an underlying asset or index and trades like a stock on regulated exchanges. In the crypto space, most products have been exchange‑listed tokens rather than institutional funds.

Bitcoin’s first spot‑ETF approval in early 2024 was historic because it required the Securities and Exchange Commission (SEC) to accept that Bitcoin can be held by a custodian with sufficient controls for investors’ safety. The approval came after years of “no‑action” stances, regulatory guidance, and market demand from both retail and institutional clients.

Key players in this new landscape include:

• SEC – the primary U.S. regulator governing securities offerings.
• FINRA & CME Group – clearinghouses that handle settlement for ETF trades.
• Major asset managers such as BlackRock, Fidelity, and Grayscale that have filed proposals for BTC ETFs.
• Emerging crypto‑focused firms like Bitwise and 21Shares exploring multi‑asset funds.

Globally, the European Union’s Markets in Crypto‑Assets (MiCA) regulation is shaping how tokenized assets can be offered to retail investors. While MiCA does not yet fully address ETFs, it sets out compliance requirements that any future crypto ETF would need to meet.

How It Works: Building a Crypto ETF

A typical crypto ETF follows these steps:

1. Fund Structure & Legal Entity: A sponsor creates an investment company (often a trust or UCITS in Europe) that holds the underlying asset.
2. Custody Arrangements: The fund’s holdings are placed in a qualified custodian with multi‑signature, insurance, and audit controls to satisfy SEC or MiCA guidelines.
3. Indexing & Pricing: For passive ETFs, an index (e.g., Bloomberg Crypto Index) is used; for active funds, portfolio managers select assets. Net Asset Value (NAV) is calculated daily from market data.
4. Regulatory Approval: The sponsor files with the SEC or equivalent bodies, providing prospectuses, risk disclosures, and compliance plans.
5. Listing & Trading: Once approved, shares are listed on a regulated exchange (e.g., NYSE, Nasdaq). Investors can buy/sell through brokerages just like equities.

Unlike spot tokens, ETF investors gain exposure via a regulated structure that mitigates counterparty risk and provides clear legal ownership. However, the fund’s performance is still tied to the price volatility of its underlying crypto assets.

Market Impact & Use Cases

Bitcoin ETFs have already expanded retail participation by reducing friction: no need for wallets, KYC on exchanges, or custody concerns. The same logic applies to Ethereum and other large‑cap tokens:

• Liquidity Expansion: ETF shares can be traded in bulk, improving price discovery.
• Diversification: Multi‑token ETFs (e.g., “Crypto Index Fund”) bundle several assets, lowering concentration risk.
• Regulatory Confidence: A compliant fund signals to regulators that the crypto space is maturing.

The upside for retail investors is clear: easier access, reduced technical barrier, and potentially lower cost of entry. Institutional money managers are already allocating billions to Bitcoin ETFs; similar flows could follow if ETH or Solana ETFs materialize.

Risks, Regulation & Challenges

• Regulatory Uncertainty: The SEC has historically been cautious about crypto assets beyond BTC. For ETH and SOL, the question remains whether their classification as securities under the Howey test will block ETF approval.
• Custodial Risk: Even with qualified custodians, the underlying asset’s security (e.g., smart‑contract exploits) can still affect fund performance.
• Liquidity Concerns: Smaller tokens may suffer from thin trading volumes, leading to wider bid‑ask spreads for ETF shares.
• KYC/AML Compliance: Investors in ETFs must undergo stringent identity checks; this can deter some retail participants used to anonymous crypto transactions.
• Market Manipulation: With high concentration of ownership, there is a risk of price manipulation if the underlying token lacks robust governance.

A concrete negative scenario would be an SEC veto that labels ETH or SOL as securities, effectively barring ETF structures. Alternatively, custodial breaches could erode investor confidence, causing capital flight even for Bitcoin ETFs.

Outlook & Scenarios for 2025+

• Bullish Scenario: The SEC adopts a clear framework that treats Ethereum and Solana as “investment vehicles,” approving multiple spot‑ETFs. Institutional inflows surge, liquidity normalizes, and retail investors benefit from regulated exposure.
• Bearish Scenario: Regulatory backlash leads to stricter KYC requirements and higher custodial costs. ETFs fail to launch for ETH/SOL, keeping the market fragmented and limiting retail participation.
• Base Case (Most Likely): Bitcoin ETFs continue to perform strongly; ETH ETFs receive a “no‑action” stance or limited approval for futures‑based products only, while Solana remains excluded. Retail investors gradually shift toward tokenized real‑world assets like those offered by Eden RWA.

For retail investors, the key takeaway is that diversification across regulated and unregulated channels will likely remain necessary until a comprehensive regulatory framework matures.

Eden RWA: Tokenized Real‑World Assets as an Alternative Path

Eden RWA exemplifies how real‑world assets can be tokenized and offered to retail investors without the need for an ETF structure. The platform democratizes access to French Caribbean luxury real estate—Saint‑Barthélemy, Saint‑Martin, Guadeloupe, Martinique—by issuing ERC‑20 tokens that represent fractional ownership in a dedicated SPV (Special Purpose Vehicle). Key features include:

• Transparent Ownership: Each token holds an indirect share of an SCI/SAS owning a luxury villa.
• Yield Distribution: Rental income is paid out in USDC directly to investors’ Ethereum wallets via automated smart contracts.
• Experiential Layer: Quarterly, a bailiff‑certified draw selects a token holder for a free week in the villa.
• DAO‑Light Governance: Token holders vote on renovation or sale decisions, aligning interests while keeping decision‑making efficient.
• Future Secondary Market: A compliant marketplace is planned to provide liquidity beyond the primary presale.

Eden RWA demonstrates how tokenization can bridge physical real estate and Web3, offering income generation and governance participation without the regulatory overhead of a crypto ETF. For investors curious about regulated exposure to digital assets, Eden’s model presents an alternative path that complements traditional ETFs.

To learn more about Eden RWA’s presale, you may explore this page or visit the dedicated presale portal at https://presale.edenrwa.com/. These links provide detailed information about tokenomics, governance, and investment terms.

Practical Takeaways

• Monitor SEC filings for any updates on crypto ETF approvals beyond Bitcoin.
• Understand the custody model of a proposed fund—custodian qualifications and insurance limits are critical.
• Check liquidity metrics: average daily trading volume and bid‑ask spreads can signal market health.
• Review the token’s underlying asset class; ETH/SOL may face different regulatory hurdles than BTC.
• Consider alternative tokenized assets like Eden RWA for yield-focused, regulated exposure.
• Stay informed about MiCA developments if you’re investing in European markets.
• Evaluate KYC/AML requirements for ETF participation versus direct token ownership.

Mini FAQ

What is the main difference between a crypto ETF and a spot‑token?

A crypto ETF is a regulated fund that holds underlying assets in custody, offers legal investor protection, and trades on traditional exchanges. A spot‑token is simply an ERC‑20 or native blockchain token traded on cryptocurrency exchanges without formal regulatory oversight.

Will an ETH ETF face the same approval process as BTC?

No. While Bitcoin has clear precedent, Ethereum’s classification under securities law can trigger a different regulatory review. The SEC may impose stricter requirements or delay approval for ETH ETFs.

Can I invest in Eden RWA through an existing brokerage?

No. Eden RWA operates on the Ethereum mainnet and requires a compatible wallet (MetaMask, WalletConnect, Ledger). Investors must use the platform’s website or marketplace to purchase tokens.

What are the liquidity risks of tokenized real‑world assets?

Unlike exchange‑listed ETFs, secondary markets for RWA tokens may be limited initially. However, Eden plans a compliant marketplace that will gradually increase liquidity over time.

How does the SEC’s “no‑action” stance affect crypto ETF prospects?

A no‑action means the SEC has not formally rejected a filing but also hasn’t approved it. It creates uncertainty for issuers and investors, potentially delaying product launches.

Conclusion

The debate over whether ETH, SOL or other assets could follow BTC ETFs underscores a broader question: how will traditional financial regulatory frameworks adapt to the rapidly evolving crypto ecosystem? Bitcoin’s spot‑ETF approval has proven that regulated exposure is possible, but extending this model to other tokens hinges on legal classification, custody maturity and market liquidity.

For retail investors, the path forward likely involves a mix of products. Spot ETFs will offer regulated, low‑friction access; tokenized real‑world assets like Eden RWA provide yield and governance in a more direct way; and futures or index funds may bridge the gap for those seeking broader diversification.

Disclaimer

This article is for informational purposes only and does not constitute investment, legal, or tax advice. Always do your own research before making financial decisions.