The conversation around exchange-traded funds has shifted far beyond Bitcoin and Ethereum. With asset managers filing for products tied to alternative tokens such as Solana, XRP, and now Sei, the possibility of an SUI ETF has become a point of serious discussion.
The recent filing of SEI ETFs by 21Shares and Canary Capital shows that smaller Layer 1 blockchains are entering the spotlight.
For SUI, which has gained attention for its scalability and developer ecosystem, the question is whether it could be next to gain regulatory approval in the United States.
The Growing Momentum Around Altcoin ETFs
The past year has seen a wave of filings with the Securities and Exchange Commission for crypto funds beyond Bitcoin and Ethereum.
These applications reflect an industry shift toward recognising investor demand for broader exposure to digital assets. The Sei ETF applications illustrate this trend clearly.
On August 28, 21Shares submitted an S-1 registration statement for a Sei ETF. The proposed fund would track the CF SEI-Dollar Reference Rate, providing investors with a direct means of gaining exposure to the price of SEI, the native token of the Sei Network.
Coinbase Custody was named as custodian, a familiar name in the sector for providing secure storage of digital assets.
The structure of the ETF is deliberately simple. It is designed as a passive product that mirrors SEI’s price movements without engaging in leverage or speculative derivatives.
There is also a possibility that the fund could participate in staking to generate rewards, although this would only be considered if legal and tax implications are fully resolved. This approach highlights how issuers are striving to strike a balance between innovation and regulatory caution.
Canary Capital also entered the field earlier in the year with its own Sei ETF application, notable for explicitly including staking as part of its design.
By integrating staking rewards into the product, Canary aimed to position its fund as not only a price-tracking vehicle but also a means of earning additional yield. This move highlights how competition among issuers is encouraging varied strategies to appeal to investors.
These applications for Sei are part of a wider trend. Alongside SEI, other altcoins, such as Solana, XRP, Cardano, Dogecoin, HBAR, and Litecoin, have also been targeted by asset managers exploring exchange-traded funds.
Bloomberg analysts have suggested that approval odds for many of these filings are above 90%, an estimate that reflects growing confidence in regulatory acceptance.
This environment naturally fuels speculation around SUI, a project that shares many characteristics with Sei in terms of being a high-performance Layer 1 blockchain with active development.
For investors and institutions, the expansion of ETFs beyond Bitcoin and Ethereum represents a major broadening of access. ETFs provide a regulated structure familiar to traditional finance, reducing the barriers to entry for those who may not want to directly manage digital assets.
The potential for SUI to join this growing list is therefore not only a question of regulatory timing but also of market demand.
The Possibility of a SUI ETF Approval
Assessing the likelihood of an SUI ETF requires looking closely at the current regulatory environment.
The SEC has developed a pattern in recent months of delaying rather than outright rejecting applications for altcoin funds. This has been evident in its handling of Solana and XRP ETF filings, where extensions were granted to allow further review.
While delays are frustrating for issuers, they are not necessarily negative signals. They often reflect the complexity of integrating new digital assets into existing regulatory frameworks.
For SUI, several factors could support a positive outcome. The first is precedent. With SEI filings already under review, the SEC has shown it is willing to entertain proposals tied to newer blockchains.
This matters because it expands the scope beyond the largest tokens and signals that other networks, including Sui, may have a viable path.
The second factor is institutional appetite. There is a clear demand for diversification. Institutions that have gained exposure to Bitcoin and Ethereum through ETFs are increasingly looking for additional assets to expand their portfolios.
Sui’s focus on scalability and developer-friendly tools positions it as an attractive candidate for this kind of product. ETFs tied to SUI would offer investors exposure to a project that is seen as part of the next generation of blockchain infrastructure.
The third factor is custody. The success of any ETF application depends heavily on secure and compliant custody solutions. Coinbase Custody, which has been named in several filings, has already demonstrated its ability to provide this service to the satisfaction of regulators.
If an SUI ETF were to be filed, the presence of an established custodian would likely strengthen its chances.
Challenges, however, remain significant. Staking is central to SUI’s tokenomics, raising questions about how it could be integrated into an ETF structure. While staking offers yield, it also introduces regulatory and tax uncertainties.
The SEC will need to decide whether it is comfortable with staking being part of a publicly listed trust. Even if staking is excluded initially, a passive price-tracking SUI ETF could still move forward.
Another consideration is liquidity. The SEC has consistently emphasised the importance of reliable price discovery and sufficient trading volumes in the underlying asset.
For SUI, demonstrating that the market is mature enough to support an ETF will be essential. The CF Benchmarks framework, used in the Sei ETF proposal, could serve as a model for ensuring robust and transparent pricing.
The October deadlines for several pending altcoin ETF decisions, including Solana and XRP, will provide an important signal. If these products are approved, it would mark a turning point and significantly increase the likelihood of future approvals, including one for SUI.
Industry analysts have already suggested that altcoin ETFs are becoming less of an exception and more of a natural extension of existing investment products.
For the SEC, the decision will rest on whether investor protection can be maintained without compromising market integrity.
For issuers, it is about demonstrating that products like an SUI ETF can operate within those boundaries. As the market continues to mature, the alignment of these interests looks increasingly possible.
Conclusion
The prospect of an SUI ETF is part of a broader movement that is reshaping how digital assets intersect with traditional finance.
With SEI ETFs now under review and other altcoin filings pending, the groundwork has been laid for tokens like SUI to take the next step toward mainstream access.
The likelihood of approval depends on regulatory comfort with staking, liquidity, and market integrity, but the demand from institutions is clear.
Should the SEC move forward positively with other altcoin ETFs in October, SUI could well find itself positioned for approval in the near future, marking another milestone in the evolution of crypto investing.