In early 2024, the crypto world was set ablaze when U.S. regulators gave the green light to the first batch of Bitcoin spot price ETFs, sending markets into a frenzy. Just months later, Ethereum spot price ETFs achieved a similar regulatory milestone, further stoking the flames of a crypto bull run that has thrilled investors globally.
Now, the spotlight turns to Solana ETFs, promising to add a new dimension to the ever-evolving landscape of digital asset investment.
This article delves into everything you need to know about Solana ETFs and why they could be the next big thing in your investment portfolio.
Ready to dive in? Let’s explore the potential of Solana ETFs and how they can elevate your investment strategy!
What Are ETFs?
An Exchange-Traded Fund (ETF) is a financial instrument or index that monitors the price of an underlying asset. ETFs can track groups of assets and sectors in addition to a single asset.
For instance, the price of Bitcoin is tracked by a Bitcoin ETF. An ETF is a mechanism investors use to increase their exposure to a certain asset. Check out our article on what a Bitcoin ETF is.
Will Solana ETF Receive Approval From the SEC?
On June 28th, 2024, VanEck, a prominent American investment management firm based in New York City, and 21Shares, a leading provider of cryptocurrency Exchange-Traded Products (ETPs), jointly filed for a spot Solana ETF.
This significant move brought a surge of attention to Solana, causing a noticeable increase in its social media buzz and investor interest.
Since the start of the year, crypto ETFs have captured the attention of investment firms, driven by the impressive trading volumes of Bitcoin ETFs in recent months. Introducing a Solana ETF further cements Solana’s rising influence in the market.
However, it’s important to note that the approval of Bitcoin and Ethereum ETFs doesn’t guarantee the same for other crypto ETFs, including Solana. Each approval involves its regulatory hurdles and considerations.
It’s unlikely that the approval of Ethereum ETFs will lead to a flood of new approvals,” said Ophelia Snyder, co-founder and president of 21.co, which sponsors and advises ARK Invest’s spot ether ETF, in an interview with Cointelegraph, a leading crypto news and price tracking site.
Crypto Experts Share Their Thoughts on Potential Solana ETF Approval
The approval of crypto ETFs, including those for Solana, is heavily influenced by U.S. politics. Regulatory decisions and Solana’s ability to address potential centralization issues are key factors in determining the future of a Solana ETF.
According to Bloomberg analyst Eric Balchunas, the upcoming November presidential election could significantly impact the approval process. The outcome of the election may lead to changes in the current SEC administration and the White House, which could, in turn, affect the regulatory stance on Solana ETFs.
“The odds of a Solana ETF being approved in the next 12 months are tied at the hip to the odds of a change in POTUS and safe to say the chances of both are higher today than they were yesterday. Although, we are not giving any exact number on this yet. Way too early,” he said.
This idea wasn’t just on Eric Balchunas’ mind; it also resonated with Scott Johnson, a general partner at Van Buren Capital.
He predicted that It is speculated that the introduction of a SOL ETF could significantly impact the upcoming elections. “There’s a 60+% chance of either a new administration coming in or the current administration being motivated to make considerable regulatory changes out of concern for the election’s outcome.” He quoted.
On the bright side, with Donald Trump now embracing digital assets and accepting cryptocurrency donations for his campaign, any potential objections to the approval of Solana ETFs might become irrelevant.
However, Balchunas noted that a major obstacle to approving a Solana ETF would be the current absence of Solana futures in the U.S. market.
Adam Cochran, a partner at crypto capital firm Cinneahain Ventures, expressed concerns about the filing for Solana ETFs, calling it “reckless.” He noted that the trading volume for SOL futures on international exchanges falls short of the SEC’s requirements.
Furthermore, the likelihood of ETF approval may be diminished due to the SEC’s previous classification of SOL as a security in at least two separate lawsuits.
“VanEck’s filing could be seen as a strategic move ahead of the November election,” explained James Seyffart, an ETF analyst at Bloomberg Intelligence, in an interview conducted before 21Shares became the second Solana applicant.
“Under the current SEC administration – based on years of prior approval and denial orders for crypto ETFs – a Solana ETF should be denied because there is no federally regulated futures market. But a new admin in the White House and a new SEC admin that’s more amenable to crypto policies could change that calculus.” He said.
Amidst the discussions from crypto experts regarding the approval of the Solana ETF and its potential impact on the upcoming presidential election, VanEck chose not to comment on whether its filing for a SOL ETF was influenced by the possibility of Trump returning to office.
Why Is a Solana ETF Important?
The recent approval of spot Bitcoin and Ethereum ETFs in the United States has ignited interest and speculation about the possibility of a Solana ETF in the future. Although the Securities and Exchange Commission (SEC) has not yet approved an official Solana ETF, the increasing popularity and widespread adoption of cryptocurrencies could lead to further advancements in this area.
Should a Solana ETF receive approval in the US, it would offer investors a regulated and convenient means to gain exposure to the Solana ecosystem via traditional investment platforms. However, it’s important to understand that the approval and launch of such an ETF would undergo thorough regulatory review and oversight.
In conclusion, the interest in Solana ETFs is growing, with separate filings made in both Canada and the United States. Canada has taken the lead with the first Solana ETF filing, while similar efforts by VanEck and 21Shares in the U.S. encounter regulatory hurdles due to the SEC’s stringent requirements for regulated futures markets before approving spot crypto ETFs.
If you live in Canada, check out the Solana ETF in Canada.
