Shorter unstaking periods could give Solana a regulatory advantage
Solana (SOL) could have a competitive edge over Ethereum (ETH) in the race for staking exchange-traded funds (ETFs), according to Bitwise CEO Hunter Horsley. Speaking at Token2049 in Singapore, Horsley highlighted Solana’s faster unstaking process as a potential advantage for issuers preparing products for US regulators.
Why Solana May Lead in Staking ETFs
Staking ETFs allow investors to gain exposure to cryptocurrencies while also earning staking rewards. However, one of the challenges is ensuring quick redemption of assets for investors. Horsley explained that Ethereum’s long withdrawal queue poses a problem for fund issuers.
Earlier delays pushed back decisions on Ether staking ETFs, including BlackRock’s iShares Ethereum Trust, to October 30. In total, 16 crypto-related funds await regulatory outcomes this month, though potential delays remain due to reduced federal agency staffing during the government shutdown.
“The ETFs need to be able to return assets on a very short time frame. So this is a huge challenge,” Horsley said.
Ethereum’s exit queue recently reached over 2 million staked tokens awaiting withdrawal, with an average wait time of around 34 days. In contrast, Solana’s unstaking periods are significantly shorter, making it more practical for ETF structures that require faster liquidity.
Workarounds and Costs for Ethereum
Horsley noted that Ethereum-based products are finding temporary solutions. For example, Bitwise’s Ethereum staking ETP in Europe uses a credit facility to maintain redemption liquidity. However, such arrangements come with capacity constraints and added costs.
Another option for Ethereum investors is liquid staking derivatives such as Lido’s stETH, which allow token holders to stay liquid while still earning staking rewards. Still, Horsley suggested these alternatives may not be ideal for large-scale ETF products.
Regulatory Deadlines Approaching
The US Securities and Exchange Commission (SEC) is reviewing multiple Solana and Ethereum ETF applications, with decisions expected in late October. Applicants include major firms such as Bitwise, Fidelity, Franklin Templeton, CoinShares, Grayscale, Canary Capital, and VanEck.
While both Ethereum and Solana remain strong candidates for ETF approval, Solana’s faster exit times may offer issuers a simpler path to compliance. If regulators prioritize liquidity and redemption efficiency, Solana staking ETFs could see earlier adoption than their Ethereum counterparts.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.