Top asset management firm VanEck has confirmed that it has submitted an application for a Solana ETF to the US Securities and Exchange Commission (SEC). However, due to its insufficient decentralization, regulatory issues with the SEC, and the lack of a SOL futures ETF, the author believes that getting approval for the ETF will be a long-term battle.
VanEck, which has already issued a Bitcoin spot ETF and is currently seeking SEC approval for an Ethereum spot ETF, has recently submitted an application for a Solana ETF (VANECK SOLANA TRUST) to the SEC. Matthew Sigel, the Director of Digital Asset Research at VanEck, stated in a post on X that SOL is a commodity similar to Bitcoin and Ethereum. He believes that Solana, with its high throughput, low fees, robust security, and strong community, can be an attractive fund option.
However, James Seyffart, an analyst at Bloomberg, expressed his doubts about VanEck’s application. Evgeny Gaevoy, the founder of cryptocurrency market maker Wintermute, also believes that the chances of a SOL ETF being approved this year are almost zero. He points out that once you see how much capital flows into the Ethereum ETF this year, you will understand that the inflow into SOL will be even less.
Although the author also wants to see more products in the market that provide traditional financial access to the crypto market, he believes that the probability of a Solana ETF being approved in the short term is low. At least the following issues need to be resolved:
Insufficient decentralization: Solana is known for its superior transaction speed and low fees, but this comes at the cost of sacrificing decentralization. Currently, operating a Solana node typically requires a high-performance hardware data center, which is expensive. This has led to Solana being labeled as a “data center chain.” Additionally, institutions holding a large amount of Solana and the history of the Solana price collapse during the FTX breakdown may lead to Solana being considered insufficiently decentralized and classified as a security.
Regulatory issues: Bitcoin and Ethereum have established themselves in the cryptocurrency market in a way that other projects cannot replicate. It would be difficult for the SEC to approve a Solana ETF without facing a flood of applications from thousands of other chains. Whether regulatory authorities can handle this influx is also a major concern. Therefore, it may take several years to come up with executable solutions before a Solana ETF can be planned.
Lack of SOL futures ETF: Based on the history of Bitcoin and Ethereum spot ETFs, the market usually needs a futures ETF to be established before applying for a spot ETF. Rob Marrocco, the Vice President of ETF Listings at Cboe, previously stated in an interview that without establishing a futures market or changing regulatory conditions, it would be impossible to have a crypto ETF other than Bitcoin and Ethereum. Even if a Solana futures ETF is launched, it would require a significant amount of trading time to establish a tracking record and prove sufficient liquidity and transparency to the market, which could take a considerable amount of time.
Considering the above points, the author believes that the likelihood of a Solana ETF being approved in the short term is low. VanEck’s move may be more aimed at gaining attention and publicity. Let’s continue to observe the situation.
Related reports:
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– Arthur Hayes: Dogecoin spot ETF expected to launch this week! Is VanEck an important driver?
– Solana passes proposal to allocate “100% of priority fees to validators,” SOL rises to $170.