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VanEck has applied with the SEC to establish the first Solana ETF in the US, expanding its cryptocurrency investment products and capitalizing on Solana’s blockchain utility. The company filed an S-1 registration statement for its “VanEck Solana Trust” on Thursday, aiming to introduce the first Solana (SOL) ETF in the US.
As the first organization in the United States to apply for a Solana ETF, VanEck is setting new standards, according to Matthew Sigel, head of digital asset research at the company. This action represents a significant advancement in the Bitcoin investment market. VanEck emphasized in the filing that the Trust and its Sponsor will not partake in staking to obtain more SOL or produce income from the shares in any other way.
On June 27, via the X platform, Sigel announced, highlighting that the VanEck Solana Trust is a new fund designed to leverage Solana blockchain’s great utility and economic viability.
Sigel stated, “We think that the native token, SOL, works in a way comparable to other digital goods like Ether and Bitcoin. On the blockchain, it is used to pay for computational services and transaction fees. SOL can be exchanged on digital asset marketplaces or utilized in peer-to-peer transactions, just as ether on the Ethereum network.”
This application is part of VanEck’s ongoing efforts to broaden its selection of cryptocurrency investment products. Despite the SEC’s continued designation of similar assets as securities, the company views SOL as a commodity. According to the prospectus, the ETF will use SOL tokens to back the Trust’s shares directly, reflecting Solana’s price performance. VanEck plans to list the ETF on the Cboe BZX Exchange.
Experts argue that, given the current availability of Ethereum and Bitcoin ETFs, it would be challenging to reject a similar product for Solana. A legal expert noted that since Ethereum ETFs and Solana ETFs operate similarly from the SEC’s perspective, it would be difficult for the agency to deny registration for Ethereum ETFs.
21Shares Also Applies for Solana ETF
21Shares also applied for a Solana ETF in the United States. This initiative mirrors VanEck’s proposal and may herald a new era of institutional adoption of cryptocurrencies while democratizing access to Solana.
The financial product innovator 21Shares aims to increase Solana’s accessibility for conventional investors through its Solana ETF proposal. This product would offer immediate access to the cryptocurrency without requiring its administration. If approved, the ETF will be listed on the Cboe BZX platform, and Solana’s spot price will be tracked.
The entry of 21Shares into the Solana ETF market, alongside initiatives from Canada and VanEck, demonstrates strong confidence in the Solana blockchain and its potential. These developments could revolutionize the cryptocurrency investing scene, offering new opportunities for financial innovation. Approval of these ETFs may lead to increased institutional use and broader recognition of cryptocurrencies as a valid asset class.
Industry Insights and Market Reactions
The cryptocurrency community is abuzz with speculation regarding the potential approval of a Solana (SOL) exchange-traded fund (ETF) by the Securities & Exchange Commission (SEC). The recent filing of S-1 registration statements for spot SOL ETFs by asset managers VanEck and 21Shares has intensified discussions, leading to a 5% decline in Solana’s value on Friday.
Following VanEck and 21Shares’ application for a spot Solana ETF, Solana became a focal point in cryptocurrency circles. Increasing Solana’s social volume highlights the growing attention and debates among industry influencers about the likelihood of the SEC’s approval.
Introducing a Solana ETF could significantly enhance the token’s market prominence, akin to the impact seen with Bitcoin ETFs over the past six months. This potential market landscape shift draws interest from financial businesses eager to capitalize on the trend.
Analyst Predictions
Eric Balchunas, a Bloomberg analyst, suggested that the approval of SOL ETFs this year might hinge on changes in the White House and the current SEC administration following the November presidential election. Balchunas noted that the prospects of a POTUS change and the approval of a Solana ETF over the next 12 months are stronger now than earlier.
Yes, the odds of a Solana ETF being approved in next 12mo are tied at the hip to the odds of a change in POTUS and safe to say the chances of both are higher today then they were yesterday.. Altho we not giving any exact number on this yet. Way too early. https://t.co/lCdF3EXtLK
— Eric Balchunas (@EricBalchunas) June 28, 2024
Scott Johnsson, General Partner at Van Buren Capital, echoed Balchunas’s sentiment, predicting a “60+% chance of a new admin and/or the current admin getting scared straight through this election that they loosen things considerably.” Johnsson believes the SOL ETF move could influence the upcoming elections.
SOL bags just got a bigger election outcome catalyst. Not great for Biden at the margins.
— Scott Johnsson (@SGJohnsson) June 27, 2024
This is probably the smart move to push this forward now, though it definitely doesn't satisfy the current regime tests. That said, you have a 60+% chance of a new admin and/or the current… https://t.co/barERDwhgp
The absence of Solana futures in the US market is a significant barrier to adopting a Solana ETF. Adam Cochran, partner at crypto venture capital firm Cinneamhain Ventures, described VanEck’s and 21Shares’ actions as “reckless” because SOL’s futures activity on foreign exchanges does not comply with SEC regulations.
Solana’s classification as a security by the SEC in previous legal actions further complicates its prospects for ETF approval. The sequence of approvals for Ethereum and Bitcoin ETFs typically starts with futures ETFs before moving to spot ETFs, a path Solana has yet to follow.
Solana experienced a 5% drop in value following VanEck and 21Shares’ filing of the ETF applications. This decline is attributed to the fading FOMO (Fear of Missing Out) after the initial excitement over the filings. According to Santiment data, a correction was anticipated due to the social volume spike on June 27, which coincided with Solana’s price increase.
What’s Next? Analysts Weighs
GSR Markets released an analysis on June 27 predicting that introducing a spot ETF for Solana (SOL) could lead to a substantial price increase. Under optimistic conditions, Solana’s price could soar nine times, reaching over $1,320. This forecast assumes that Solana spot ETFs would capture 14% of the flows observed by Bitcoin spot ETFs since their inception.
GSR Markets also provided more conservative projections. In a bearish scenario, where Solana ETFs capture only 2% of Bitcoin ETF flows, SOL’s price could still increase by 1.4 times. A middle-range scenario, where Solana ETFs account for 5% of Bitcoin ETF flows, predicts a 3.4 times price increase.
These projections highlight Solana’s significant potential in the spot ETF market, particularly when considering staking reward revenues. Even without these additional earnings, Solana’s price could still experience substantial growth.
Despite GSR Markets’ optimism, significant regulatory hurdles must be overcome before a Solana spot ETF can be approved. The US Securities and Exchange Commission (SEC) recently classified Solana as a security in its legal actions against Coinbase and Binance, complicating the approval process. A shift in SEC leadership or a new presidential administration may be required for such a product to gain authorization.
The regulatory challenges have not dampened excitement around Solana. VanEck’s application for a Solana ETF and increasing interest from asset managers like Franklin Templeton underscore the cryptocurrency’s potential. If a Solana spot ETF were approved, it could attract substantial capital flows similar to those driving Bitcoin and Ethereum ETFs, significantly boosting Solana’s price.
An XRP ETF is Next: Ripple CEO
In a recent interview, Ripple CEO Brad Garlinghouse expressed optimism that the U.S. Securities and Exchange Commission (SEC) will approve spot XRP exchange-traded funds (ETFs) next year. Garlinghouse discussed the evolving regulatory landscape for cryptocurrencies in the United States and highlighted the SEC’s shift towards a more pragmatic approach following several legal defeats.
JUST NOW ON CLAMAN⬇️⬇️
— Chad Steingraber (@ChadSteingraber) June 4, 2024
Brad Garlinghouse on XRP ETF and regulations!
ETF = 2025 😎 https://t.co/i8Wv3OOehR pic.twitter.com/8T1pAcdKAm
Garlinghouse addressed the SEC’s recent approval of 19b-4 forms for eight spot Ethereum ETFs, noting that the SEC had been reluctant to approve such ETFs until forced by court decisions. He criticized the SEC’s resistance, stating,
“It’s frustrating that we must go through the courts to get these positive outcomes. US investments should fund these innovations. We must accept these. Regretfully, this SEC has been opposing it at every turn.”
Garlinghouse is confident that the SEC will inevitably approve additional cryptocurrency ETFs, including those for XRP, Solana, and Cardano. He reiterated his prediction from the Consensus 2024 conference, emphasizing that diversified exposure to various digital assets is logical for investors.
Regarding Ripple’s ongoing legal battle with the SEC over XRP transactions, Garlinghouse acknowledged the difficulties but remained optimistic. He stated, “Can they make things hard for you? Many people’s lives have been made difficult by them, and they have been defeated in court.”
Garlinghouse concluded by stressing the importance of diversified investments. “People don’t want just exposure to one commodity,” he said. “If you are exposed to gold, you should consider exposure to silver or other commodities. It just makes logic to me. You should not limit your asset exposure to a single thread.”