ETF policy analysis: can ETH, SOL or other assets follow BTC ETFs?

Explore whether Ethereum, Solana or other crypto assets can launch ETFs like Bitcoin in 2025. Our deep dive looks at regulation, market dynamics, and RWA links.

• What regulators are saying about crypto‑ETF approvals beyond Bitcoin.
• Why the timing matters for retail investors looking at ETH, SOL and other tokens.
• Key regulatory hurdles and how tokenised real‑world assets could shape future ETF models.

Over the past year, the crypto industry has seen a steady stream of ETF proposals—Bitcoin ETFs became mainstream in 2024, sparking speculation that Ethereum, Solana and other high‑profile tokens will follow suit. The promise is clear: bring institutional confidence, liquidity and dollar‑denominated exposure to a broader investor base.

Yet the path from proposal to approval is uneven. While Bitcoin’s ETF journey largely hinged on custodial trust and market surveillance, assets like Ethereum and Solana face distinct technical, regulatory and market‑structure challenges. This article dissects those obstacles through an “ETF policy analysis” lens, focusing on whether ETH, SOL or other tokens can realistically launch ETFs in 2025.

For the crypto‑intermediate retail investor, understanding these dynamics is essential. It informs portfolio decisions, risk appetite and timing of entry into tokenised assets that may eventually be wrapped by an ETF structure. In short, this article offers a roadmap for evaluating the viability of non‑Bitcoin crypto ETFs today.

1. Background: Why Crypto ETFs Matter in 2025

Exchange‑traded funds (ETFs) remain the most popular vehicle for institutional and retail exposure to traditional assets—stocks, bonds, commodities—and have become increasingly attractive for cryptocurrencies. An ETF offers daily liquidity, regulatory oversight, and a familiar investment framework.

The first Bitcoin ETF approval in 2024 was a milestone, yet the crypto market has not seen a comparable product for Ethereum or Solana. The reasons are multifold:

• Regulatory clarity: The SEC’s “Regulation Best Interest” and MiCA (EU) have set baseline expectations but leave room for interpretation.
• Custody & surveillance: Bitcoin’s market is relatively mature; ETH and SOL markets are fragmented across exchanges with higher volatility.
• Token classification: While Bitcoin is widely regarded as a commodity, Ethereum and Solana sit at the intersection of utility tokens and securities in certain jurisdictions.
• Underlying asset quality: ETFs typically require a robust, liquid underlying market. ETH’s liquidity has improved but still lags behind BTC; SOL’s volatility remains a concern for risk‑averse investors.

In 2025, the crypto industry is poised to pivot from speculation toward structured products that offer regulatory legitimacy and broader adoption. The success of Bitcoin ETFs provides a template but also highlights gaps that other tokens must address before approval can be granted.

2. How Crypto ETFs Work: A Simplified Model

An ETF’s core function is to track the price of an underlying asset while providing investors with a tradable, regulated security on a stock exchange. The process typically involves three key actors:

• Issuer (ETF sponsor): Designs the product, files regulatory paperwork and manages ongoing operations.
• Custodian: Safely holds the underlying crypto assets on behalf of the ETF’s investors.
• : Buy or sell ETF shares, providing liquidity and price discovery.

When a crypto ETF is launched, the issuer purchases the underlying token in large blocks, often via an authorised market maker. The custodian stores the tokens in secure, multi‑signature wallets with insurance coverage. The ETF’s net asset value (NAV) reflects the spot price of the underlying token plus any associated fees.

Key regulatory checkpoints include:

• KYC/AML compliance: Ensuring all participants meet anti‑money‑laundering standards.
• Surveillance mechanisms: Preventing market manipulation and ensuring price integrity.
• Reporting obligations: Regular disclosure of holdings, NAV calculations and performance metrics.

For Bitcoin ETFs, the SEC accepted a custodian‑based model with robust surveillance. However, extending this model to Ethereum or Solana requires additional safeguards because of their higher volatility and fragmented market structure.

3. Market Impact & Real-World Use Cases

The launch of a crypto ETF can unlock several benefits:

• Institutional entry: Portfolio managers can now allocate to crypto without direct custody exposure.
• Price discovery: ETFs provide a regulated market for price signals, reducing reliance on OTC and exchange‑based quotes.
• Liquidity amplification: ETF shares trade on major exchanges, creating secondary markets that enhance overall liquidity.
• Risk mitigation: Investors benefit from regulatory oversight and custodial protection.

Concrete examples of tokenised real‑world assets (RWA) are emerging. Tokenised real estate, bonds and commodity contracts have been wrapped into ETFs or separate product structures. These RWAs often use smart contracts for dividend distribution and ownership records—an approach that could be adapted for crypto ETFs.

While the Bitcoin ETF already demonstrates viability, the same framework must be adapted to address technical and legal nuances of other tokens.

4. Risks, Regulation & Challenges for ETH and SOL ETFs

• Regulatory uncertainty: The SEC has issued guidance that treats Ethereum as a “security” in certain contexts, complicating ETF eligibility. Solana’s classification remains ambiguous across jurisdictions.
• Smart contract risk: Custodial wallets for ETH and SOL may expose investors to potential code vulnerabilities or mis‑execution.
• Liquidity gaps: Unlike Bitcoin, Ethereum and Solana markets are more fragmented, increasing the cost of large block purchases needed for ETF creation units.
• KYC/AML compliance: Exchange‑based trading can create challenges in verifying the source of funds for large institutional orders.
• Price manipulation risk: Smaller market caps and higher volatility make ETH and SOL more susceptible to spoofing or wash trades, potentially undermining ETF price integrity.

In a negative scenario, regulatory bodies could deny ETF approval on the basis of insufficient market surveillance or custody arrangements. A denial would delay institutional adoption and keep retail investors in a fragmented market environment with limited liquidity.

5. Outlook & Scenarios for 2025+

Bullish scenario: The SEC finalises a custodial framework that extends to Ethereum, supported by robust surveillance tools from major exchanges. Solana follows suit after the EU’s MiCA clarifies token classification. ETF approvals roll out in Q3 2025, driving institutional inflows and improving liquidity for both assets.

Bearish scenario: Regulatory backlash due to a high‑profile manipulation case involving ETH or SOL leads to stricter scrutiny. Custodians are forced to withdraw, causing a supply crunch and delaying ETF approvals until at least 2026.

Base case: By mid‑2025, the SEC approves a limited Bitcoin ETF and grants conditional approval for an Ethereum “exchange‑traded product” (ETP) that requires a custodial partnership with a regulated bank. Solana remains in limbo due to classification uncertainties, but a pilot project begins within the EU under MiCA guidelines.

Retail investors should monitor:

• The SEC’s public comment responses to ETF proposals.
• Custodian partnerships and insurance coverage levels.
• Exchange surveillance capabilities for ETH/SOL markets.

Eden RWA: A Concrete Example of Tokenised Real‑World Asset Platforms

Eden RWA exemplifies how blockchain can democratise access to high‑value physical assets. By tokenising luxury real estate in the French Caribbean—Saint‑Barthélemy, Saint‑Martin, Guadeloupe and Martinique—the platform offers investors fractional ownership via ERC‑20 property tokens. Each token represents a share of an SPV (SCI/SAS) that owns a carefully curated villa.

Key features:

• ERC‑20 Property Tokens: Backed by an SPV, allowing direct purchase and transfer on the Ethereum blockchain.
• Rental Income in USDC: Periodic payouts are automatically sent to investors’ wallets through smart contracts.
• DAO‑light Governance: Token holders vote on major decisions (renovation, sale) while a small DAO committee ensures operational efficiency.
• Experiential Stays: Quarterly draws award token holders a free week in a villa they partially own—adding utility beyond passive income.
Future Liquidity
• Planned compliant secondary market for property tokens to enable liquidity before the main public launch.

Eden RWA’s model aligns closely with the regulatory and operational frameworks that would be required for a crypto ETF. By demonstrating robust custodial arrangements, transparent governance, and automated income distribution, it serves as an early indicator of how real‑world assets can be integrated into regulated financial products.

Interested readers can explore Eden RWA’s presale to learn more about tokenised real estate investment opportunities. Visit https://edenrwa.com/presale-eden/ or https://presale.edenrwa.com/. This information is provided for educational purposes only and does not constitute investment advice.

Practical Takeaways

• Regulatory clarity is the single biggest hurdle for non‑Bitcoin crypto ETFs.
• Custodial solutions with multi‑signature wallets and insurance are essential.
• Liquidity depth must be proven before an ETF can launch successfully.
• ETH may see a regulated ETP sooner than SOL, given its broader institutional interest.
• Tokenised RWAs like Eden RWA illustrate the feasibility of integrating real assets into regulated investment vehicles.
• Keep an eye on SEC comment periods and MiCA developments for early signals.
• Verify that any platform offering ETF exposure follows KYC/AML compliance and audit trails.

Mini FAQ

What is the difference between a crypto ETF and an ETP?

An Exchange‑Traded Fund (ETF) is typically backed by physical assets, whereas an Exchange‑Traded Product (ETP) may use derivatives or synthetic exposure. For cryptocurrencies, many proposals are structured as ETPs due to custody challenges.

Can Ethereum be classified as a commodity like Bitcoin?

Regulators differ: the SEC has sometimes treated Ethereum as a security, especially where it functions as a utility token. The classification impacts ETF eligibility and investor protection requirements.

What role does a custodian play in a crypto ETF?

The custodian holds the underlying tokens securely, often using multi‑signature wallets and insurance, ensuring that ETF shares represent actual holdings. They also provide audit trails for regulatory compliance.

How do tokenised real‑world assets fit into the ETF landscape?

Tokenised RWAs can serve as the underlying asset of an ETF if they meet regulatory standards. Platforms like Eden RWA demonstrate how property tokens, backed by physical villas, could be integrated into a regulated investment