Hope springs ETFternal

Investment companies focused on crypto can't get enough of ETFs, but the SEC is another story.

Why it matters: Exchange-traded funds make digital assets more accessible, and can provide a security and compliance layer necessary for institutional investors.

The latest: Companies keep proposing new ETFs, for new cryptocurrencies and more complex options-based products, to the nation's securities regulator.

• Just this week, Grayscale proposed converting its Digital Large Cap Fund to an ETF and Canary Capital proposed a litecoin ETF.
• Bitwise filed for an XRP ETF earlier this month.

Zoom in: Grayscale's ETF would get an investor into bitcoin, ether, Solana's SOL and Avalanche's AVAX all in one instrument.

• Litecoin is an old cryptocurrency whose relevance has been slipping. It was the seventh-largest digital asset in the second week of October 2018, but it has slipped to the 21st spot.
• XRP is a digital asset that now sits at the seventh-most valuable spot.

Yes, but: Statements and actions from the chiefs of the SEC show an agency that couldn't be more ill-disposed toward the cryptocurrency industry.

• While investment firms look to amp crypto liquidity with regulated products, the SEC is suing liquidity providers.

Reality check: Existing bitcoin ETFs, the first products approved for digital assets, only happened because the SEC lost in court.

• The timing of the second and latest ETF approval, for ether, looked like a political maneuver, but there's no way to know that for sure.
• In announcing the bitcoin ETF approval in January, SEC chair Gary Gensler said, "It should in no way signal the Commission's willingness to approve listing standards for crypto asset securities. Nor does the approval signal anything about the Commission's views as to the status of other crypto assets under the federal securities laws."
• Between the lines: No other digital asset is likely to have the political muscle to get an ETF green light.

Zoom out: The success of crypto ETFs has been a mixed bag.

• Bitcoin's ETFs were a wild success, led by BlackRock's IBIT, which was the fastest-ever to hit $10 billion in assets under management. Collectively, the bitcoin ETFs are outperforming the first ETFs for gold.
• Yes, but: Ether ETFs were much more lackluster. Lightning did not strike twice.

What we're watching: The community that seems to think it has the best shot at the next spot ETF is fans of solana, which had a surge in 2021 and another this year. It's the fifth-largest crypto asset.

• Users have flocked to the Solana blockchain network this year to make bets on meme coins, though it also runs other interesting networks, such as for networking and cartography.
• Indeed, venture fund a16z credits Solana as the largest single contributor to the growth of on-chain activity this year, with 100 million active addresses (which doesn't mean 100 million people — but it probably does mean millions and millions of people).

💭 Our thought bubble: None of these will happen in the near term.

• That said, there's one thing the bitcoin ETF hopefuls proved: Persistence pays off.