Solana Spot ETF Approval Timing, Details in Full: SOL Up 30% in July as Next ETF Hopeful
A Solana (SOL) ETF is possible, but it'll be a bumpy road. (Credit: Hameem Sarwar @ CCN)
- Spot Solana ETFs may come as part of a combined digital assets fund alongside BTC and ETH.
- SOL is up 15% following the week and over 30% for the month as spot ETH ETFs prepare for launch,
- Two spot SOL ETF applications have been made by VanEck and 21Shares.
- The SEC has until March 2025 to approve or reject.
Now that spot Ethereum exchange-traded funds (ETFs) are here, the hype for the next altcoin ETF is already ramping up, and many are looking to Solana (SOL) to achieve the coveted spot ETF status.
As the fifth largest altcoin by market cap and one of the most popular blockchain ecosystems, SOL is a favorite, but there are still major regulatory hurdles to cross. That said, a SOL ETF may come in a different form.
Solana ETFs?
With spot Ethereum ETFs launching on July 23, all eyes are on the top altcoin to see which one has the credentials to be the next spot crypto ETF. Whilst many look to Ripple (XRP) as a strong candidate, several industry experts and Ripple CEO Brad Garlinghouse think SOL is the next logical choice.
However, due to numerous regulatory hurdles and ongoing court cases with the U.S. Securities and Exchange Commission (SEC) to determine how certain cryptos are classified, a spot SOL or spot XRP ETF may not happen anytime soon.
But it may come in a different form. Nate Geraci, President of the ETF Store, recently suggested that a spot SOL ETF could arrive as part of a combined spot ETF, in which it would be packaged alongside BTC and ETH.
That said, the Cboe recently submitted spot SOL ETF applications for both VanEck and 21Shares in the first attempt to gain approval for Solana-based spot ETF products on U.S. markets. With 240 calendar days to make a decision, the SEC has until March 2025 to make a decision.
Launch Conditions
The road to a spot SOL ETF will be bumpy. First, the SEC would have to reverse 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 needs to trade for 18 – 24 months before the SEC considers approving it as 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).
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. However, as Gensler highlighted , crypto ETFs such as Ethereum have to go through rigorous processes 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 said that the SEC’s role is to ensure that investors are protected with legally required disclosures and that exchanges are adequately regulated to prevent fraud, market manipulation, and other nefarious activities.
Whilst the SEC is seemingly warming to crypto, altcoins probably have a long way to go before trading as ETFs on U.S. exchanges. At best, the SEC could begin considering 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.
