An assessment conducted by Alex Thorn, Head of Research at Galaxy Digital, on the proposals for spot Solana Exchange Traded Products (ETPs) by investment firms VanEck and 21Shares revealed a significant move towards integrating Solana (SOL) into the regulated financial markets similar to Bitcoin and Ethereum.
VanEck’s proposal involves launching a commodity-based trust to directly hold Solana, enabling the ETP to closely track the asset’s market price without engaging in asset staking, unlike some crypto ETPs.
Despite the positive market response with SOL’s price increasing by about 8%, the filing remains at an early stage with operational details like custodian, cash custodian, and authorized participants yet to be finalized in subsequent amendments.
Challenges in Approving a Spot Solana ETF
VanEck has yet to file the necessary 19b-4 form to initiate the SEC’s formal review process, which typically extends up to 240 days, with a potential final approval by March 15, 2025. The SEC’s current classification of Solana as an unregistered security complicates the approval process for a Solana-based ETP.
The SEC has traditionally approached crypto ETPs cautiously, progressing from regulated futures markets to ETPs based on those futures before US-based spot ETPs. The SEC’s rejection of Bitcoin ETPs in the past was due to concerns over market size and surveillance, but recent developments have paved the way for their approval.
Potential Shift in Approval Odds
The recently passed FIT21 Act in the US House, clarifying the regulatory boundaries between the SEC and CFTC, could influence future cryptocurrency regulation. This legislation provides clarity on digital assets’ classification as commodities or securities, potentially improving the approval prospects for digital currency ETPs, including Solana.
Despite regulatory uncertainties, Alex Thorn of Galaxy Digital highlights the history of VanEck’s proactive filing strategies and suggests that legislative clarity could impact the odds of ETP approval for digital currencies beyond Bitcoin and Ether.
Currently, SOL is trading at $147.54.
