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Solana Spot ETF Timing: When Will SEC Consider SOL Fund?

Last Updated 6 days ago
Eddie Mitchell
Last Updated 6 days ago
Key Takeaways
  • A Solana (SOL) ETF may be one of the most desired, but most difficult to be approved.
  • Many altcoins lack adequate disclosure standards preventing them from becoming regulated assets
  • The U.S. SEC still considers Solana (SOL) to be an unregistered security in its lawsuits against Coinbase, Kraken, and Binance.

Now that spot Ethereum (ETH) exchange-traded funds (ETFs) have been approved, many are beginning to wonder which altcoin is next in line to achieve the coveted ETF status.

As the fourth largest altcoin by market cap and one of the most popular blockchain ecosystems, Solana (SOL) is a favorite, but there are still major regulatory hurdles to cross.

Launch Conditions

Whilst Ripple CEO Brad Garlinghouse seems to think that SOL will be one of the next altcoin ETFs next to Cardano (ADA) and Ripple (XRP), a spot Solana ETF could be the least likely of the three, though many are optimistic it will be next.

The road to a spot SOL ETF will be bumpy. First, the SEC would have to do a U-turn on its lawsuits against Coinbase, Kraken, and Binance, in which it names Solana as one of the many unregistered securities sold by crypto exchanges.

Furthermore, no SOL-based futures products are trading on U.S. stock exchanges. Typically, a futures commodity would need to trade for 18 – 24 months before the SEC will consider a spot product.

Presently, there are a few Solana-based exchange-traded products (ETPs) trading. These include the Grayscale Solana Trust (GSOL ), the VanEck Solana  exchange-traded note (ETN), and the 21Shares Solana (ETP).

Ethereum ETFs

Although spot ETH ETFs have been given the go-ahead, they are yet to be formally approved for trading, and may not launch for some time.

SEC chair Gary Gensler recently  hinted that the roll-out of ETH ETFs may take weeks or months. Speaking with CNBC , Gensler noted that the timing of their release will largely depend on the issuers themselves.

“The underlying exchange trade products still need to go through a process to have the disclosure about that. Now, that will take some time but they are working on that right now.”

For Gensler, most cryptocurrencies fail to meet “essential disclosure standards” that are expected of regulated assets, and it is this lack of transparency that can hinder an investor’s ability to make informed decisions.

When questioned on the possibility of other ETFs for lesser-know tokens such, as well as larger tokens such as Cardano (ADA), Gensler reiterated his stance on inadequate disclosures, implying these tokens are unregistered securities.

Eyes on Solana

Arguably, the approval of spot ETH ETFs could be interpreted as a regulatory endorsement of broader crypto technologies and tokens, or at least a step in that direction.

As highlighted by Matrixport co-founder Daniel Yan, SOL could follow both BTC and ETH, positing that Solana is a better investment. Furthermore, SOL is undeniably popular amongst crypto users.

Seemingly, there’s plenty of appetite for a SOL ETF. But as Gensler has highlighted , ETH ETFs are still going through a rather rigorous process to be approved, and given the timeline, Solana ETFs could still be years out.

“Ethereum had been traded on the Chicago Mercantile Exchange futures for three-plus years. And the staff looked at that closely, and that was approved,”

Gensler further indicates that the SEC’s role is to ensure that investors are protected with legally required disclosures. Furthermore, to ensure exchanges are adequately regulated to prevent fraud, market manipulation, and other nefarious activities.

Whilst the SEC is seemingly warming to crypto, altcoins have a long way to go before finding themselves trading as ETFs on U.S. exchanges. At best, the SEC could begin eyeing SOL fund applications in 2025.

But this primarily depends on several major factors, including the fact that it is classed as an unregistered security, as per several lawsuits from the SEC to crypto exchanges.

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