Alex Thorn, director of analysis at Galaxy Digital, lately analyzed spot Solana exchange-traded product (ETP) purposes submitted by funding companies VanEck and 21Shares. The paperwork, filed with the U.S. Securities and Change Fee (SEC) on June 28, signify an aggressive transfer to combine Solana (SOL) right into a structured framework for regulated monetary markets, much like that established for Bitcoin and Ethereum.
As described in its S-1 submitting, VanEck’s proposal seeks to launch a commodities-based belief that may maintain Solana instantly, permitting the ETP to intently observe the market worth of the asset. In contrast to some cryptocurrency ETPs, this product doesn’t take part within the staking of held property.
After the information was introduced, the market responded positively, with SOL costs rising by about 8%. Nonetheless, the submitting continues to be in its early phases and lacks an in depth working construction together with a custodian, money custodian and licensed individuals. These points are usually addressed in later revisions because the product matures and is finally accredited.
Why the spot Solana ETF has slim odds
As of the newest replace, VanEck has not filed the required Kind 19b-4, which might set off the SEC’s formal evaluate course of. Bloomberg analyst James Seyffart stated the everyday evaluate interval, as soon as initiated, can last as long as 240 days. Due to this fact, if VanEck information its paperwork quickly, a ultimate ruling is anticipated to be made on or about March 15, 2025.
The SEC at the moment considers Solana an unregistered safety, largely primarily based on ongoing litigation in opposition to main cryptocurrency alternate Coinbase. This classification complicates the approval course of for Solana-based ETPs. Provided that the U.S. Securities and Change Fee is at the moment alleging that Solana is an unregistered safety in its case in opposition to Coinbase, the appliance is more likely to be rejected if there isn’t a substantial change within the SEC’s perspective.
Traditionally, the SEC has taken a cautious strategy to cryptocurrency ETPs. The approval course of usually follows a sequential path, beginning with regulated futures markets, then ETPs primarily based on these futures, and eventually U.S. spot ETPs. Bitcoin and Ethereum ETPs have skilled various levels of resistance and success alongside this path.
It’s value noting that the SEC’s earlier refusal to approve a Bitcoin ETP was primarily based on considerations about market measurement and regulation. The turning level got here in August 2023 with a ruling by the D.C. Circuit Courtroom of Appeals that upheld the adequacy of futures market regulation. The ruling facilitated the approval of Bitcoin spot ETPs, which started in January 2024, adopted by Ethereum ETPs in Could 2024.
Odds can change shortly
The FIT21 invoice lately handed by the U.S. Home of Representatives delineates the regulatory boundaries between the SEC and the Commodity Futures Buying and selling Fee (CFTC) and should play an necessary function in future cryptocurrency regulation. The invoice clarifies which digital property needs to be thought-about commodities and which digital property needs to be thought-about securities. This legislative readability may pave the best way for future approval of digital forex ETPs, together with Solana. “Such readability may additionally considerably affect or enhance the probabilities of the ETP approving underlying digital currencies aside from Bitcoin and Ethereum,” Thorn famous.
General, the trail ahead for the Solana ETP is fraught with regulatory hurdles and uncertainty. Galaxy Digital’s Alex Thorn concluded: “VanEck has a historical past of early submissions: within the final spherical of Bitcoin ETPs, they had been the fourth submitter (at some point after BlackRock), they usually had been the primary Spot Ethereum ETP individuals. That is to be counseled – perhaps they’re betting on the result of the election.
At press time, SOL was buying and selling at $147.54.
Featured picture from ByteTree, chart from TradingView.com
