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Cboe’s Solana ETF Proposal Puts SEC on Edge With 240-Day Countdown to Approve or Deny

Last Updated July 9, 2024 3:59 PM
Teuta Franjkovic
Last Updated July 9, 2024 3:59 PM
By Teuta Franjkovic
Verified by Insha Zia

Key Takeaways

  • Solana ETF filings have sparked renewed interest but face regulatory challenges that may affect their approval, depending on the US election outcomes.
  • The Solana price has shown resilience and could be poised for a significant rally.
  • Ongoing investigations and regulatory scrutiny could dampen investor enthusiasm for Solana.

Echoing the path of spot Ethereum ETFs, Cboe has filed a 19b-4 application to list spot Solana ETFs  from 21Shares and VanEck. These filings mark the first attempt to gain approval for Solana-based ETF products in the market, putting the SEC on edge. 

Countdown to Solana ETFs Starts

Cboe’s 19b-4 filing with the SEC triggers a countdown, compelling the regulator to pass judgment on the proposals by March. According to SEC rules, the clock is set at 240 calendar days for a decision.

At press time, VanEck and 21Shares are the only issuers that have filed S-1s for Solana ETFs. After approving the 19b-4 form, the SEC must approve their S-1 filings before trading can begin. However, no specific deadline exists for these disclosures at the time of writing.

The ETFs would be the third of its kind in the market, should the SEC approve it. 

Rob Marrocco, Cboe’s global head of ETP Listings, underscored the significance of the filing, sharing :

“We are now addressing the increasing investor interest in Solana – one of the most actively traded cryptocurrencies after Bitcoin and Ether.”

Solana ETF Fate Hinges on US Elections

Considering SEC Chair Gary Gensler’s stringent crackdown on the crypto industry and his reluctance to offer clear guidelines, many businesses are hesitant to innovate new crypto products, fearing potential charges.

However, with a new administration looming after the November elections, institutions like VanEck and 21Shares are positioning themselves to capitalize on renewed regulatory clarity and possibly more favorable conditions for the industry. 

According to  Bloomberg analyst James Seyffart, the fate of the Solana ETFs hinges on the outcome of the upcoming presidential election. Both issuers’ deadlines are set for March 2025, strategically positioning them well after the US Presidential elections in November.

Matthew Sigel, Head of Digital Assets Research at VanEck, confirmed  that they are betting on a new administration taking over. 

Should Donald Trump or RFK Jr. assume office, Bloomberg analyst Eric Balchunas indicated  that he expects spot Solana ETFs to be available by mid-March 2025. However, if Biden remains in control, analysts suggest that the likelihood of ETF approval is nearly zero.

Besides its bet on the administration, another hurdle for the Solana ETF lies in the absence of a futures market on the CME, which has historically been crucial for regulatory approval of spot Bitcoin and Ethereum ETFs. Despite this, Matthew Sigel of VanEck expresses confidence that establishing a CME futures market for Solana won’t throw a wrench in the works for their ETF’s approval.

Rumors Swirl About Investigations

In March, Fortune reported that the SEC was investigating three related companies, which remained unnamed, for potential violations of securities laws. 

Following the report, rumors about Solana being under investigation surfaced. Crypto influencer Crypto Bitlord suggested  that details about the investigation could soon become public. 

With regulatory uncertainties and potential investigations looming, the future of Solana ETFs remains uncertain, leaving investors to wonder what lies ahead for this promising yet embattled cryptocurrency.

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