The prospects of the SEC approving spot Solana ETF is sparking excitement though analysts project a lengthy journey ahead.
Despite the favorable odds for the US Securities and Exchange Commission (SEC) approving the Solana-based exchange-traded funds (ETFs), analysts consider their debut is uncertain. The ETF analysts attribute potential delay from pending regulatory review, pending enforcement actions and the public commentary on the filings. As such, the ETF gurus consider several matters could change for Solana hopefuls before the ETFs start trading.
Bloomberg’s ETF analyst Eric Balchunas reflects on the recent development as the regulator failed to issue an outright rejection to the applications. The pronouncement by the senior ETF analysts emerge as the SEC signaled the start to weigh filings for Solana ETFs this week. The securities watchdog could replicate past incidents to extend the review deadline to as late as mid-October as witnessed in approving other crypto-based.
The Solana ETFs debut will broaden access to the crypto asset-focused products poised to replicate the spot Bitcoin ETFs success since their approval in Jan 2024. Market observers point towards both spot Bitcoin and Ethereum ETFs attracting billion-dollar cashflow from the traditional financial (TradFi) institutions. This translated to a wave that sent the digital asset markets upward.
The spot Solana ETFs has grabbed the attention of several asset managers including VanEck, Canary Capital, 21Shares, Grayscale and Bitwise. Balchunas projects a 70% odds for SOL ETFs approval this year.
Meanwhile, crypto prediction platform Polymarket considers 84% chance of SEC green light to SOL ETFs by Dec 31. However, the exact timing for the approval is a mystery.
Although the SEC under interim-chair Mark Uyeda embraces a crypto-friendly stance, Balchunas admits uncertainty in how the approval process will unfold. Previously, the SEC had during Gary Gensler tenure delayed decision on the spot Bitcoin ETFs until the court intervened to rule in Grayscale favor.
Balchunas adds that a decision not to punt the decision three times would constitute a refreshing signal. He is optimistic of a shorter approval time unlike during the Gensler’s tenure.
Balchunas is optimistic of Solana ETF approval in the coming weeks though acknowledges several specific things are worth scrutinizing.
Lawsuits and Statements
Balchunas indicates that when SEC provides feedback on proposed rule changes captured in the 19b-4 filings would create a momentum for imminent spot Solana ETFs. Such statements would suggest the SEC is materially engaged with the asset managers.
The senior ETF analyst at Bloomberg considers an indication of the asset managers meeting with the SEC team as bullish especially to address questions about the SOL ETFs. However, he considers enforcement actions that SEC initiated in the past are worth to monitor. In particular, the analyst cites the 2023 lawsuit levelled against Coinbase as critical given the mention of Solana as security.
The SEC lawsuit against Coinbase is currently paused following the New York judge ruling to grant the crypto exchange motion for the interlocutory appeal. The conflicting rulings on how to apply securites laws to digital assets prompted the go-ahead for the higher court intervention.
Balchunas observed that a retreat by the SEC from legal fight with Brian Armstrong-led Coinbase and dropping Solana claims would create the good sign toward approval momentum.
The Trump nominee for SEC chair Paul Atkins is a likely factor particularly in his forthcoming Senate hearing. A statement linked to crypto-focused ETF approval would create a positive signal.
Is Solana ETF In the Bag?
The crypto-friendly approach by Trump administration convinces some analysts to consider the conditions for Solana ETFs approval have already been met. Bitwise investment strategist Juan Leon ruled out concluding Solana ETF is in the bag, though acknowledged the change of turne in SEC.
Previously, the SEC cited fraud and potential for market manipulation to reject the spot Bitcoin ETFs. Nonetheless, Grayscale legal victory in 2023prompted the approval of spot Bitcoin ETFs at onset of last year.
The appellate court in Washington DC held that the denial of Grayscale application to convert trust fund into the spot ETF was both arbitrary and capricious. The judges observed that the agency already granted green light to the Bitcoin futures ETFs and that the existence of regulated futures market addressed fraud and manipulation concerns.
Such conditions reflect in this week development where Coinbase derivatives unveiled Solana future contracts under the US Commidity Futures Trading Commission (CFTC). Leon considers that with this in place, the SEC could ultimately drop the regulated futures markets consideration as Coinbase move likely delivered same effect. Such increased the odds of the SEC approving Solana ETF.
