As a seasoned researcher with years of experience navigating the complex and ever-evolving world of cryptocurrencies, I find myself standing at yet another regulatory crossroads. The recent rejection by the SEC of Solana ETF proposals submitted by Cboe Global Markets has cast a long shadow over the crypto industry’s quest for broader institutional adoption.
A notable disappointment for the cryptocurrency sector occurred as the U.S. Securities and Exchange Commission (SEC) declined multiple requests from Cboe Global Markets to launch a Solana exchange-traded fund (ETF).
It appears that the SEC’s action may have been influenced by questions regarding the classification of Solana. Specifically, there seems to be uncertainty within the Commission about whether Solana’s digital token, SOL, falls under the category of “securities.”
Solana ETF Proposals Deemed ‘Dead On Arrival’
As stated by Bloomberg ETF specialist Eric Balchunas, the Solana ETF’s application for approval by the Securities and Exchange Commission (SEC) did not proceed beyond the second step in the review process, which is when the SEC publishes the 19b-4 filings on its website.
As an analyst, I’m sharing my perspective: It appears that the regulatory hurdles have effectively labeled the Solana ETF proposals as “dead on arrival” or “DOA,” according to Balchunas’ statements. He further emphasized that these filings currently hold a slim chance of approval, comparable to a snowball’s likelihood of surviving in hell. However, this outlook could potentially change if there is a significant shift in the Commission’s leadership.
As a crypto investor, I’ve noticed some recent developments regarding Solana that might affect potential investors like us. It seems that the Securities and Exchange Commission (SEC) has expressed concerns about Solana’s classification as a security. These concerns appear to have been directly addressed with potential ETF issuers, leading Cboe to remove the related 19b-4 forms from their website earlier this month. This move suggests that there might be some regulatory hurdles ahead for Solana-related ETFs, which is worth keeping an eye on.
James Seyffart, who works alongside Balchunas and is an expert in ETFs, pointed out that the SEC is vigorously advocating this point in various forums, indicating the distinction they see between categorizing Solana (SOL) as a security and Ethereum (ETH) as something other than a security.
However, the story does not end there. While the Cboe filings have been withdrawn, the S-1 registration statement for VanEck’s Solana ETF remains active on the SEC’s EDGAR system.
VanEck’s Bid To Classify SOL As Commodity
According to Matthew Sigel, VanEck’s Head of Digital Assets Research, the company considers Solana (SOL) to be similar to Bitcoin (BTC) and Ethereum, as they believe SOL should be categorized as a commodity due to its advancements in decentralization.
Sigel emphasized multiple aspects that contribute to Solana’s resemblance to a commodity. Among these factors are the substantial decrease in SOL holdings among the top 100 wallets, and the expanding network of validators across 41 different nations, with over 300 data centers playing host.
Furthermore, Siegel emphasized the imminent Firedancer client on the Solana blockchain, a project by troubled Jump Crypto. This new development is expected to enhance Solana’s decentralization, making it increasingly challenging for any single entity to exert control over the blockchain. In conclusion, Siegel noted:
By integrating its decentralized structure with Solana’s practical uses and economic significance, Solana resembles digital assets such as Bitcoin and Ethereum quite closely. We continue to actively support this perspective in collaboration with our exchange allies when communicating with relevant regulatory bodies.
As a researcher, I can affirm that the ongoing dispute about Solana’s regulatory categorization serves as a reminder of the hurdles posed by the Commission in recent years, which have hindered the industry’s quest for wider institutional acceptance and recognition of crypto-based investment instruments beyond the two dominant cryptocurrencies available on the market.
Due to the strong stand the Securities and Exchange Commission (SEC) has taken on this matter, it’s unclear what lies ahead for Solana ETFs. Despite this uncertainty, VanEck seems resolute in pressing their argument that Solana is similar to a commodity.
At the time of writing, SOL was trading at $142, a little change from Monday’s opening price.
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2024-08-21 12:12