Alex Thorn, Head of Analysis at Galaxy Digital, not too long ago offered an analysis on the filings for spot Solana Trade Traded Merchandise (ETPs) by funding corporations VanEck and 21Shares. These filings, made with the US Securities and Trade Fee (SEC) on June 28, characterize 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 can maintain Solana straight, thus permitting the ETP to trace the asset’s market worth intently. Not like some crypto ETPs, this product won’t have interaction in staking the held property.
Following the announcement, the market responded positively, with SOL’s worth marking an approximate 8% improve. Nonetheless, the submitting remains to be in its early phases, missing in detailed operational buildings resembling custodian, money custodian, and licensed individuals. These facets are usually addressed in later amendments because the product matures towards closing 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 type, which triggers the SEC’s formal overview course of. Based on Bloomberg’s analyst James Seyffart, the everyday overview interval, as soon as initiated, extends as much as 240 days. Thus, if VanEck information quickly, the ultimate dedication might be anticipated round March 15, 2025. This course of entails a number of regulatory checkpoints and public remark intervals that are normal to the approval workflow for brand spanking new monetary merchandise.
The SEC at the moment 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. Provided that the Securities & Trade Fee is at the moment 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 probably that this software shall be rejected,” acknowledged Thorn.
Traditionally, the SEC has adopted a cautious strategy in the 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 finally, 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 Could 2024.
The Odds May Change Shortly
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 position in future cryptocurrency regulation. This laws clarifies which digital property must 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 type of clarity could also materially affect or improve the odds of ETP approval for underlying digital currencies beyond 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 history of filing early: in the last round of Bitcoin ETPs, they were the fourth filer (filed one day after BlackRock), and they were the first to file for a spot Ethereum ETP. That’s commendable – perhaps here they are betting on the outcome of the election.”
At press time, SOL traded at $147.54.
Featured picture from ByteTree, chart from TradingView.com
