Alex Thorn, Head of Analysis at Galaxy Digital, not too long ago offered an evaluation on the filings for spot Solana Alternate Traded Merchandise (ETPs) by funding corporations VanEck and 21Shares. These filings, made with the US Securities and Alternate Fee (SEC) on June 28, symbolize an aggressive transfer to combine Solana (SOL) into the structured framework of regulated monetary markets, akin to these established for Bitcoin and Ethereum.
The proposal by VanEck, as outlined of their S-1 doc, goals to launch a commodity-based belief that may maintain Solana immediately, thus permitting the ETP to trace the asset’s market value carefully. Not like some crypto ETPs, this product is not going to have interaction in staking the held property.
Following the announcement, the market responded positively, with SOL’s value marking an approximate 8% improve. Nevertheless, the submitting continues to be in its early levels, missing in detailed operational constructions resembling custodian, money custodian, and licensed members. These points are usually addressed in later amendments because the product matures towards last approval.
Why The Odds For A Spot Solana ETF Are Slim
As of the newest updates, VanEck has not but filed the requisite 19b-4 kind, which triggers the SEC’s formal assessment course of. Based on Bloomberg’s analyst James Seyffart, the standard assessment interval, as soon as initiated, extends as much as 240 days. Thus, if VanEck recordsdata quickly, the ultimate dedication might be anticipated round March 15, 2025. This course of includes a number of regulatory checkpoints and public remark intervals that are normal to the approval workflow for brand new monetary merchandise.
The SEC at present views Solana as an unregistered safety, based totally on ongoing litigation in opposition to main cryptocurrency change Coinbase. This classification complicates the approval course of for a Solana-based ETP. On condition that the Securities & Alternate Fee is at present alleging in its case in opposition to Coinbase that Solana is an unregistered safety, absent a considerable change in posture from the SEC, it’s possible that this utility might be rejected,” acknowledged Thorn.
Traditionally, the SEC has adopted a cautious strategy in direction of crypto ETPs. The method for approval usually follows a sequential path beginning with regulated futures markets, then ETPs based mostly on these futures, and in the end, US-based spot ETPs. Bitcoin and Ethereum ETPs have navigated this pathway with various levels of resistance and success.
Considerably, the SEC’s prior refusal to approve Bitcoin ETPs was based mostly on issues over market dimension and surveillance. The turning level got here with a DC Circuit Courtroom of Appeals ruling in August 2023, which supported the sufficiency of futures market surveillance. This ruling facilitated the approval of Bitcoin spot ETPs, which commenced in January 2024, adopted by Ethereum ETPs in Might 2024.
The Odds Might Change Rapidly
The not too long ago handed FIT21 Act within the US Home, which delineates the regulatory boundaries between the SEC and the Commodity Futures Buying and selling Fee (CFTC), might play an important function in future cryptocurrency regulation. This laws clarifies which digital property needs to be handled as commodities and which as securities. Such legislative readability might pave the way in which for future approvals of digital foreign money ETPs, together with Solana. “That kind of readability might additionally materially have an effect on or enhance the percentages of ETP approval for underlying digital currencies past Bitcoin and Ether,” Thorn famous.
Total, the trail ahead for Solana ETPs is fraught with regulatory hurdles and uncertainties. Alex Thorn of Galaxy Digital summarizes, “VanEck has a historical past of submitting early: within the final spherical of Bitcoin ETPs, they had been the fourth filer (filed sooner or later after BlackRock), they usually had been the primary to file for a spot Ethereum ETP. That’s commendable – maybe right here they’re betting on the result of the election.”
At press time, SOL traded at $147.54.
Featured picture from ByteTree, chart from TradingView.com