Bitcoin ETF Leader BlackRock Opts Out of Solana ETF Race

BlackRock, which achieved unprecedented success with its Bitcoin ETF, has no interest in offering a Solana ETF. At least for now.

With over $17.2 billion in AUM, BlackRock's IBIT Bitcoin ETF is second only to the Grayscale Bitcoin Trust. Shortly after its launch earlier this year, IBIT even broke records by reaching $10 billion faster than any US ETF in history.

It now leads the pack in terms of inflows, attracting more than $19.5 billion since January. On Monday alone, IBIT attracted around $205 million in net inflows while its peers reported either losses or zero net flows.

BlackRock's Ethereum ETF inflows, although far less impressive than its Bitcoin offerings, are also nothing to sniff at. At the time of writing, BlackRock's ETHA has seen inflows total $58 million since launching last week.

However, as lucrative as ETFs seem to be for the investment giant, Solana ETFs are of no interest.

BlackRock Says No

BlackRock's chief investment officer for ETF and index investments, Samara Cohen, told Bloomberg that the firm believes no other digital asset is comparable to Bitcoin or Ethereum.

“We really look at the investability to see what meets the criteria, what meets the bar to be delivered in an ETF,” Cohen said. “For us, both in terms of investability and also what we hear from our clients, Bitcoin and Ethereum definitely meet that bar, but it will be a while before we see anything else.”

Cohen believes the appetite for Solana is not comparable to that of Bitcoin or Ethereum at the moment. She added that it "would be a while" before investors would see any other crypto-related ETF product from BlackRock.

Robert Mitchnick, BlackRock’s head of digital assets, echoed a similar message at Bitcoin 2024 in Nashville over the weekend.

BlackRock sees “very little interest” among clients in crypto beyond Bitcoin and Ethereum, according to Mitchnick, who said the asset manager doesn’t foresee many crypto ETFs outside of those two core digital assets.

“I would say that our client base today, their interest overwhelmingly is in Bitcoin first, and then somewhat in ETH… and there’s very little interest today beyond those two,” Mitchnick said at a panel called From Strategy to Innovation: BlackRock's Bitcoin Journey.

“I don't think we're gonna see a long list of crypto ETFs,” Mitchnick concluded.

BlackRock No Fomo

Despite being a market leader, BlackRock's disdain for crypto ETFs that aren't Bitcoin or Ethereum isn't shared by its peers.

Just last week, Franklin Templeton declared support for potentially exploring Solana.

"Besides Bitcoin and Ethereum, there are other exciting and major developments that we believe will drive the crypto space forward," Franklin Templeton said on X. "Solana has shown major adoption and continues to mature, overcoming technological growing pains and highlighting the potential of high-throughput, monolithic architectures."

Besides Bitcoin and Ethereum, there are other exciting and major developments that we believe will drive the crypto space forward. Solana has shown major adoption and continues to mature, overcoming technological growing pains and highlighting the potential of high-throughput,…
— Franklin Templeton Digital Assets (@FTI_DA) July 23, 2024

Earlier this month, 21Shares also filed for an S-1 registration statement with the US Securities and Exchange Commission (SEC) for a spot Solana ETF.

The fund would track the price of SOL and trade on the Cboe BZX Exchange. Similar to 21Shares' other spot ETF offerings, Coinbase Custody Trust Company would hold the underlying SOL assets in segregated wallets.

VanEck was the first to file for a Solana ETF back in June. Matthew Sigel, VanEck head of digital assets research, explained that the firm filed for the product because "We believe Solana stands out as a powerful and accessible blockchain software."

"We think this combination of high throughput, low fees, robust security, and a strong community vibe makes Solana an attractive option for an exchange-traded fund, offering investors exposure to a versatile and innovative open-source ecosystem," he added, highlighting how Solana is a competitor to Ethereum.

Franklin Templeton, 21Shares (with Ark), and VanEck all have varying sizes of Bitcoin ETFs with AUMs of $312 million, $2.85 billion, and $42.41 million respectively.

Additionally, Hamilton Lane recently became the first asset manager to launch a fund on Solana. The asset manager partnered with Web3 protocol, Libre, to launch a private credit fund on the Solana blockchain. Investors are now able to access Hamilton Lane's Senior Credit Opportunities Fund (SCOPE) on the blockchain.

In Defence of SOL

Solana is having an extraordinary 2024. Up more than 600% over the year, SOL has seriously outperformed Bitcoin's 128% and Ethereum's 78% throughout the same time frame.

In Q2, Solana's ecosystem welcomed more than 20 new tokens and has "continuously topped the growth chart." Ethereum seems to have lagged in the quarter, listing only 14 new tokens.

Year to date, Solana has seen 147 new token listings while Ethereum has seen only 89 new token listings during this period. Interestingly, Ethereum started the year with 138 new tokens compared to Solana's 119.

Solana has even outperformed Ethereum in total transaction fees and Maximum Extractable Value (MEV) tips for the first time on a weekly basis.

The Layer 1 blockchain's fee revenue of $25 million eclipsed Ethereum's $21 million, signalling a significant shift in the network activity, according to Blockworks Research analyst Dan Smith.

The network's daily fee revenue also peaked at $5.5 million on July 28th, marking a three-month high, with Smith noting that 58% of this revenue came from MEV tips, with priority transaction fees accounting for 37%.

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