XRP and Solana ETFs: Wall Street Validation or Decentralization Death Sentence?
Wall Street’s push to approve altcoin exchange-traded funds (ETFs) this October, dubbed “Cointober” by some analysts, is drawing renewed attention to the growing institutional appetite for cryptocurrency.
This has also raised questions about decentralization versus institutional validation.
Cointober Frenzy
According to Alphractal, 59% of institutional investors plan to allocate more than 5% of their assets under management to crypto in 2025, up sharply from less than 2% in 2023. This could represent a potential $2.4 trillion in capital flowing into digital assets.
However, the data analytics platform warns that these ETFs may be legitimizing corporate-controlled tokens rather than democratizing access to decentralized networks. Analysis of major altcoins reveals a significant concentration of control. For instance, the platform found that Ripple Labs controls 45-51% of the total XRP supply, including 40-45% in escrow and 5-6% in treasury holdings.
Meanwhile, Solana’s governance remains heavily influenced by Solana Labs and the Solana Foundation, with the Foundation holding around 40% of non-circulating tokens and venture capital firms and insiders controlling about 50%. Ethereum, though more distributed, remains guided by the Ethereum Foundation in terms of protocol development. Unlike Bitcoin, which operates without a central controlling entity, these altcoins maintain corporate governance structures that allow large holders to shape policy and influence network operations.
Alphractal’s data, which has been taken from more than 1,000 on-chain, derivatives, and sentiment metrics, indicates institutional adoption closely aligns with these centralized control patterns. Their Network Stress Index and True Market Mean Price indicators show that these altcoin networks remain operationally stable despite concentrated governance.
ETF approval timelines have also shortened from 240 to 75 days. This is potentially fast-tracking institutional validation for these centralized tokens. Alphractal argues that this process effectively converts access to corporate-controlled blockchain assets into a regulated investment vehicle, rather than offering true decentralized exposure. Its macroeconomic and derivatives analytics show institutions favor regulated exposure over direct ownership of native tokens.
The broader debate, Alphractal observed, should be on whether ETF listings represent a legitimate step toward mainstream adoption or the erosion of decentralized principles.
Control and Profit
These concerns echo critiques of Vandell Aljarrah, co-founder of Black Swan Capitalist, who had previously offered a sharp critique of XRP ETFs. Earlier this year, Aljarrah warned investors against mistaking them for true access to crypto. He had emphasized that such ETFs are not designed to democratize ownership or unlock practical utility for investors. Instead, he framed them as instruments focused on control and profit. While holding native XRP allows participation in remittances, staking, liquidity provisioning, and other network functions, ETFs provide only price exposure, stripping investors of the ability to move, swap, or self-custody their tokens.
Aljarrah’s argument highlighted a fundamental trade-off wherein investors may gain Wall Street-regulated exposure to XRP without ever truly engaging with the token’s functional utility.
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