Spot Crypto ETF Watch: 3 Cryptocurrencies That Could Be Next on the SEC's Approval List

After the successful launch of new spot ETFs for both Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) last year, it's perhaps no surprise that the race is now on to offer investors an even broader array of single-crypto ETFs this year.

Right now, the three top prospects appear to be XRP (CRYPTO:XRP), Solana (CRYPTO:SOL), and Litecoin (CRYPTO:LTC). But which of these cryptos -- if any -- deserve a place in your portfolio?

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XRP

As the fourth-largest cryptocurrency, with a $130 billion market cap, XRP is at the top of the wish list for many crypto investors. Already, a handful of different investment firms have filed applications with the SEC to offer a spot XRP ETF.

Image source: Getty Images.

However, there's more to consider than just investor demand. That's because Ripple, the company behind the XRP crypto token, has been engaged in a long-standing legal dispute with the SEC over whether XRP might actually be a security. After more than four years, this issue still hasn't been resolved, and the conventional wisdom is that an ETF for XRP won't be approved until the situation involving XRP, Ripple, and the SEC has been fully sorted out.

The good news, if you're thinking about investing in XRP, is that a new pro-crypto approach from the SEC under the Trump administration could make all these regulatory issues disappear overnight. According to Bloomberg, there's now a 65% chance of XRP getting a spot ETF this year. And JPMorgan Chase has already projected that as much as $8 billion could flow into XRP once that happens.

Solana

Next up is Solana, which ranks as the sixth-largest cryptocurrency, with a $70 billion market cap. It has emerged as the clear No. 1 challenger to Ethereum in the Layer 1 blockchain space and, until recently, appeared to be firing on all cylinders. It was adding new users, transaction activity was off the charts, and it was expanding quickly within the world of decentralized finance (DeFi).

In February, however, the meme coin bubble burst, bringing down just about every single meme coin launched on the Solana blockchain -- including the meme coins for Donald Trump and Melania Trump. As a result, Solana has taken a heavy beating and is now down 52% since the inauguration.

This raises a very pertinent question: Will regulators really approve a spot ETF for a cryptocurrency that is facing such a maelstrom of controversy? It doesn't help matters, either, that the SEC suggested back in June 2023 that Solana -- just like XRP -- might actually be a security.

That being said, Bloomberg still gives a spot Solana ETF a 70% chance of approval. And JPMorgan Chase thinks that as much as $6 billion could flow into Solana as a result.

Litecoin

The third top prospect that might receive a spot ETF is Litecoin. What makes Litecoin so attractive as an ETF prospect is the fact that regulators appear to be unanimous that Litecoin is a commodity and not a security. So, unlike XRP and Solana, there are no known regulatory issues swirling around it.

As a result, Bloomberg currently projects that a spot ETF for Litecoin now has a 90% chance of approval. Two firms -- Canary and Grayscale -- already have submitted applications to the SEC, and the current thinking is that a Litecoin ETF could start trading as soon as mid-July.

But once it's available, are investors really going to buy it? While XRP and Solana have shown the potential to soar in value over the past two years, Litecoin has not. While Litecoin is up nearly 30% this year, it has consistently been a market underperformer.

So, where's BlackRock?

It's easy to get excited about the prospect of new spot crypto ETFs. The conventional thinking is that the launch of these ETFs will onboard new investors, bring liquidity into the crypto market, legitimize the idea of investing in cryptocurrency, and help reduce overall regulatory risk.

So, why isn't BlackRock (NYSE:BLK), the acknowledged market leader when it comes to crypto ETFs, planning to launch new spot ETFs for other cryptocurrencies? It has yet to file an ETF application for XRP, Solana, or Litecoin.

Given that its iShares Bitcoin Trust (NASDAQ:IBIT) has accumulated over $50 billion in assets from investors, it would seem like a no-brainer to follow up that success with more ETFs. However, if you listen carefully to remarks made by top BlackRock executives, a certain theme emerges: institutional investors see a clear investment thesis for investing in Bitcoin (it's "digital gold"), but it's not quite so clear what the investment thesis is for other cryptocurrencies right now.

Follow the SEC

That being said, all eyes need to be on the SEC these days. The initial signs in 2025 have been positive, and that's why so much anticipation is building for these new ETFs. It really seems to be a matter of when, not if, they are approved.

When the new spot ETFs do arrive this year, they could finally kick-start the long-awaited crypto bull market in 2025. Depending on your overall risk tolerance, adding some XRP or Solana to your portfolio now might be one way to benefit from this anticipated rally.

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Dominic Basulto has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.