Alex Thorn, Head of Analysis at Galaxy Digital, lately supplied an evaluation on the filings for spot Solana Change Traded Merchandise (ETPs) by funding corporations VanEck and 21Shares. These filings, made with the US Securities and Change 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 can maintain Solana straight, thus permitting the ETP to trace the asset’s market worth 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 worth marking an approximate 8% enhance. Nonetheless, the submitting remains to be in its early levels, missing in detailed operational constructions equivalent to custodian, money custodian, and approved individuals. These points are sometimes addressed in later amendments because the product matures towards last approval.
Why The Odds For A Spot Solana ETF Are Slim
As of the most recent 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 standard 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 durations that are commonplace to the approval workflow for brand spanking new monetary merchandise.
The SEC at present views Solana as an unregistered safety, based on ongoing litigation towards main cryptocurrency trade Coinbase. This classification complicates the approval course of for a Solana-based ETP. Provided that the Securities & Change Fee is at present alleging in its case towards Coinbase that Solana is an unregistered safety, absent a considerable change in posture from the SEC, it’s seemingly that this software will probably be rejected,” acknowledged Thorn.
Traditionally, the SEC has adopted a cautious strategy in direction of crypto ETPs. The method for approval typically 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 measurement 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 Shortly
The lately handed FIT21 Act within the US Home, which delineates the regulatory boundaries between the SEC and the Commodity Futures Buying and selling Fee (CFTC), may play a vital function in future cryptocurrency regulation. This laws clarifies which digital property ought to be handled as commodities and which as securities. Such legislative readability may pave the way in which for future approvals of digital forex ETPs, together with Solana. “That kind of readability may additionally materially have an effect on or enhance the chances of ETP approval for underlying digital currencies past Bitcoin and Ether,” Thorn famous.
General, 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 in the future after BlackRock), and so they had been the primary to file for a spot Ethereum ETP. That’s commendable – maybe right here they’re betting on the end result of the election.”
At press time, SOL traded at $147.54.
Featured picture from ByteTree, chart from TradingView.com
