Solana ETFs are exchange-traded funds (ETFs) designed to track the performance of Solana and are traded on traditional market exchanges rather than cryptocurrency exchanges. These exchange-traded funds (ETFs) offer investors a regulated and accessible way to gain exposure to Solana's price movements without directly owning the cryptocurrency. ^[2]

Solana ETFs Status

Solana-ETFs are currently not available for trading in the US market. However, on June 27, 2024, VanEck^[1], the ETF issuing company, submitted a proposal to the US Securities and Exchange Commission (SEC) to establish an Exchange-Traded Fund (ETF) that will track the performance of Solana directly. The S-1 registration form lodged with the Securities and Exchange Commission (SEC), helped lift the SOL token's 24-hour gain to almost 8%. ^[2][3]

"We believe the native token, SOL, functions similarly to other digital commodities such as bitcoin and ETH," VanEck's head of digital assets research, Matthew Sigel, wrote in a now deleted post on X arguing that SOL is a commodity, not a security. ^[4]

"It is utilized to pay for transaction fees and computational services on the blockchain," he wrote.^[3]

Sigel^[4] added that VanEck filed for a Solana ETF because the blockchain acts as a competitor to Ethereum with a "unique combination of scalability, speed, and low costs." ^[3]

Upcoming Elections may Determine Solana ETF Approval

According to Matthew Sigel, the Head of Digital Asset Research at VanEck^[1], the upcoming elections may significantly influence the SEC’s decision. During a Bloomberg interview on July 4, 2024, Sigel expressed his worry about Solana being an unregistered security. He mentioned that SOL’s lack of futures market regulation could lead to hurdles during this reviewing period. ^[5]

Matthew mentioned that there are other commodities with ETFs in the market, including traditional assets, that do not have regulation in the futures market. Because Solana is not considered a security, he hopes that the U.S. SEC will treat it as such and approve the ETF without requiring futures market regulation. ^[5]

Speculators suggest a win for former president Donald Trump, who is a crypto-friendly candidate during the upcoming elections will aid Solana-ETFs' approval. Matthew agreed that if Gary Gensler remains SEC chair, he might not approve the ETF unless he receives instructions to treat Solana differently. ^[5]

“I think VanEck’s filing is a sort of call option on the November election,” - James Seyffart, ETF analyst at Bloomberg Intelligence, said during an interview conducted before 21Shares became the second solana applicant. ^[6]

“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.”^[6]

Other Challenges

Eric Balchunas, ETF analyst from Bloomberg, doubts that a Solana ETF will be approved as there is no Solana futures ETF in the US. Also, the SEC is concerned about potential fraud and market manipulation affecting spot ETF products. ^[5]