Alex
Thorn,
Head
of
Research
at
Galaxy
Digital,
recently
provided
an

analysis
on
the
filings
for
spot
Solana
Exchange
Traded
Products
(ETPs)
by
investment
firms
VanEck
and
21Shares.
These

filings,
made
with
the
US
Securities
and
Exchange
Commission
(SEC)
on
June
28,
represent
an
aggressive
move
to
integrate
Solana
(SOL)
into
the
structured
framework
of
regulated
financial
markets,
akin
to
those
established
for
Bitcoin
and
Ethereum.

The
proposal
by
VanEck,
as
outlined
in
their
S-1
document,
aims
to
launch
a
commodity-based
trust
that
will
hold
Solana
directly,
thus
allowing
the
ETP
to
track
the
asset’s
market
price
closely.
Unlike
some
crypto
ETPs,
this
product
will
not
engage
in
staking
the
held
assets.

 

Following
the
announcement,
the
market
responded
positively,
with
SOL’s
price
marking
an
approximate
8%
increase.
However,
the
filing
is
still
in
its
early
stages,
lacking
in
detailed
operational
structures
such
as
custodian,
cash
custodian,
and
authorized
participants.
These
aspects
are
typically
addressed
in
later
amendments
as
the
product
matures
toward
final
approval.

Why
The
Odds
For
A
Spot
Solana
ETF
Are
Slim

As
of
the
latest
updates,
VanEck
has
not
yet
filed
the
requisite
19b-4
form,
which
triggers
the
SEC’s
formal
review
process.
According
to
Bloomberg’s
analyst
James
Seyffart,
the
typical
review
period,
once
initiated,
extends
up
to
240
days.
Thus,
if
VanEck
files
soon,
the
final
determination
could
be
expected
around
March
15,
2025.
This
process
involves
several
regulatory
checkpoints
and
public
comment
periods
which
are
standard
to
the
approval
workflow
for
new
financial
products.

The
SEC
currently
views
Solana
as
an
unregistered
security,
primarily
based
on
ongoing
litigation
against
major
cryptocurrency
exchange
Coinbase.
This
classification
complicates
the
approval
process
for
a
Solana-based
ETP.
Given
that
the
Securities
&
Exchange
Commission
is
currently
alleging
in
its
case
against
Coinbase
that
Solana
is
an
unregistered
security,
absent
a
substantial
change
in
posture
from
the
SEC,
it
is
likely
that
this
application
will
be
rejected,”
stated
Thorn.

Historically,
the
SEC
has
adopted
a
cautious
approach
towards
crypto
ETPs.
The
process
for
approval
generally
follows
a
sequential
path
starting
with
regulated
futures
markets,
then
ETPs
based
on
those
futures,
and
ultimately,
US-based
spot
ETPs.
Bitcoin
and
Ethereum
ETPs
have
navigated
this
pathway
with
varying
degrees
of
resistance
and
success.

 

Significantly,
the
SEC’s
prior
refusal
to
approve
Bitcoin
ETPs
was
based
on
concerns
over
market
size
and
surveillance.
The
turning
point
came
with
a
DC
Circuit
Court
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,
followed
by
Ethereum
ETPs
in
May
2024.

The
Odds
Could
Change
Quickly

The
recently
passed

FIT21
Act
in
the
US
House,
which
delineates
the
regulatory
boundaries
between
the
SEC
and
the
Commodity
Futures
Trading
Commission
(CFTC),
could
play
a
crucial
role
in
future
cryptocurrency
regulation.
This
legislation
clarifies
which
digital
assets
should
be
treated
as
commodities
and
which
as
securities.
Such
legislative
clarity
could
pave
the
way
for
future
approvals
of
digital
currency
ETPs,
including
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
noted.

Overall,
the
path
forward
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
image
from
ByteTree,
chart
from
TradingView.com

Go to Source
Author: Jake Simmons

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