Urgent Solana ETF Filings: What’s Next for SEC Approval?

The cryptocurrency market is buzzing with anticipation following a significant step towards potential investment products. Seven firms hoping to launch a Solana ETF in the United States have recently submitted updated registration statements to the Securities and Exchange Commission (SEC). This move is a crucial part of the regulatory journey, bringing the prospect of a spot Solana exchange-traded fund closer to reality, though experts caution that immediate SEC approval is unlikely.

Decoding the Latest Solana ETF Filings

On June 13, several prominent asset managers filed S-1 statements or amendments for their proposed spot Solana ETFs. This wave of ETF filings demonstrates continued interest and effort from the financial industry to bring a Solana investment product to market. The firms involved include Fidelity Investments, 21Shares, Franklin Templeton, Grayscale Investments, Bitwise Investments, Canary Capital, and VanEck.

VanEck holds the distinction of being the first firm to file for a spot Solana ETF earlier in June 2024, with their amended S-1 filing rounding out the day’s submissions. These filings are a necessary procedural step, but they are typically followed by a period of detailed review and communication with the regulator.

Why Isn’t SEC Approval Immediate?

While the submission of S-1 filings is a positive development, market analysts like Bloomberg ETF analyst James Seyffart suggest that immediate SEC approval is improbable. Seyffart pointed out that a considerable amount of ‘back and forth’ is typically required between the SEC and the issuers to finalize the details of such financial products. Recalling the process for spot Bitcoin ETFs, he noted there were numerous filings and discussions over months before approval was granted in January 2024.

The SEC’s review process is thorough, examining everything from the fund’s structure and operations to its disclosures and risks. This period allows the regulator to seek clarification and require amendments, ensuring the product meets necessary investor protection standards before it can be offered to the public.

The Significance of Solana Staking Language

A notable detail highlighted by James Seyffart is the inclusion of ‘staking language’ in all the recent Solana ETF filings. Staking involves locking up cryptocurrency to support the network’s operations and earn rewards. For a spot ETF, including staking could potentially offer investors additional yield, mirroring the native asset’s capabilities.

However, integrating staking into an ETF structure presents new regulatory considerations. Seyffart noted that while lessons from previous approvals like Bitcoin and Ether ETFs might speed up some aspects, these lessons do not necessarily apply to staking. The regulatory stance on offering staking through an ETF wrapper is still developing, and this is an area where the ‘back and forth’ with the SEC will likely be crucial. There is even speculation that approval for Solana staking within ETFs could potentially coincide with the SEC’s decision on allowing staking for spot Ether ETFs, which are also under review for this feature.

What Experts Say About the Timeline and Crypto ETFs

Market observers continue to offer insights into the potential timeline for crypto ETFs like the proposed Solana products. Bloomberg Intelligence analysts previously boosted the estimated odds of the SEC approving a Solana ETF in 2025 to 90%. While immediate approval next week seems unlikely according to Seyffart, the long-term outlook remains optimistic for 2025.

Bloomberg senior ETF analyst Eric Balchunas has even suggested preparing for a potential ‘altcoin ETF summer,’ with Solana positioned to lead the way. This sentiment reflects a growing expectation that regulatory barriers for investment products based on cryptocurrencies beyond Bitcoin and Ether may gradually be lowered, opening new avenues for investor access to the digital asset class.

Key Takeaways from the Filings:

• Seven firms filed S-1s or amendments for spot Solana ETFs on June 13.
• Filings included language related to Solana staking, a key point of discussion with the SEC.
• Experts anticipate a period of ‘back and forth’ with the SEC, meaning approval is not imminent.
• The process is expected to be detailed, similar to the lead-up for spot Bitcoin ETFs.
• Long-term outlook for SEC approval in 2025 remains positive among some analysts.

In Summary

The recent wave of Solana ETF filings marks a significant procedural step forward. The inclusion of staking language introduces a new layer of complexity that will require careful navigation with the SEC. While immediate approval is not expected, the ongoing dialogue between issuers and the regulator, coupled with increasing interest in crypto ETFs, suggests that the path for a spot Solana ETF is being actively forged. Investors and market participants should monitor the regulatory developments closely, as the ‘back and forth’ with the SEC will ultimately determine the structure and timing of potential approval.