Understanding the Potential Approval of Spot Solana ETPs
In a recent analysis, Alex Thorn, Head of Research at Galaxy Digital, discussed the filings for spot Solana Exchange Traded Products (ETPs) by investment firms VanEck and 21Shares. These filings, submitted to the US Securities and Exchange Commission (SEC) on June 28, are a strategic move to bring Solana (SOL) into the highly regulated financial markets, similar to Bitcoin and Ethereum.
VanEck’s Proposal for a Solana-based ETP
- VanEck outlined their plan in an S-1 document to create a commodity-based trust that directly holds Solana to track its market price without engaging in staking.
- The market responded positively to the announcement, with SOL’s price increasing by approximately 8%.
- However, the filing is in its early stages and lacks details on operational structures such as custodians, cash custodians, and authorized participants, which are crucial for final approval.
Challenges Ahead for a Spot Solana ETF
- VanEck has not yet filed the necessary 19b-4 form for the SEC’s formal review process, which typically takes up to 240 days.
- The SEC currently views Solana as an unregistered security due to ongoing litigation against Coinbase, posing a hurdle for a Solana-based ETP approval.
- Historically, the SEC has been cautious with crypto ETP approvals, following a sequential path from futures markets to spot ETPs.
Potential Regulatory Changes and Clarity
- The recently passed FIT21 Act in the US House may impact future cryptocurrency regulation by clarifying the regulatory boundaries between the SEC and the CFTC.
- Legislative clarity on which digital assets are commodities or securities could enhance the approval chances of digital currency ETPs, including Solana.
- The road ahead for Solana ETPs is challenging, with regulatory hurdles and uncertainties impacting the approval process.
Hot Take: Navigating the Path for Solana ETP Approval
As the crypto landscape evolves, the potential approval of spot Solana ETPs by investment firms signals a shift towards integrating Solana into regulated financial markets. While regulatory challenges persist, legislative clarity and strategic filings may pave the way for successful Solana ETP approvals in the future.
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