As a seasoned crypto investor with a keen interest in the regulatory landscape, I find Alex Thorn’s analysis of the Solana ETP filings by VanEck and 21Shares both insightful and cautionary. The potential approval of a Solana ETP would undoubtedly be a significant milestone for the cryptocurrency, potentially leading to increased institutional adoption and price appreciation.
Alex Thorn, the Head of Research at Galaxy Digital, has shared his insights on the recent SEC filings by investment firms VanEck and 21Shares for Solana (SOL) spot Exchange Traded Products (ETPs). These filings, submitted on June 28, signify a bold step to incorporate Solana into the regulated financial market infrastructure similar to that of Bitcoin and Ethereum.
VanEck’s proposed commodity trust, as detailed in their S-1 filing, intends to own Solana directly, facilitating close tracking of its market price for the ETP. In contrast to certain crypto ETPs, this fund will abstain from staking the possessed assets.
After the announcement was made, the market showed a favorable reaction towards SOL, resulting in around an 8% price rise. Yet, it’s important to note that the filing is still in its initial stages and lacks comprehensive details regarding key operational components like custodians, cash custodians, and authorized participants. These elements are usually addressed in subsequent amendments as the product progresses towards final approval.
Why The Odds For A Spot Solana ETF Are Slim
Based on current information, VanEck has not yet submitted the necessary form 19b-4 with the SEC, leading to the initiation of a formal review. As reported by Bloomberg’s James Seyffart, the review period can last up to 240 days. Consequently, if VanEck files soon, an anticipated decision would be reached around March 15, 2025. This process encompasses multiple regulatory checks and public comment phases that are customary in the approval procedure for new financial products.
According to ongoing legal action between the SEC and Coinbase, the SEC considers Solana an unsecured security. This classification poses challenges for the approval of an ETP based on Solana. Considering the SEC’s stance in its lawsuit against Coinbase, it is probable that this application will be denied without significant shifts in the SEC’s perspective.
As a crypto investor, I’ve noticed that the Securities and Exchange Commission (SEC) has traditionally taken a conservative stance when it comes to approving crypto exchange-traded products (ETPs). The approval process typically starts with regulated futures markets, then moves on to ETPs based on those futures, and finally, US-based spot ETPs. Bitcoin and Ethereum ETPs have each followed this pathway, encountering different levels of opposition and achievement along the way.
As a crypto investor, I’ve noticed that the SEC’s previous decisions to reject Bitcoin Exchange-Traded Products (ETPs) were driven by concerns over market size and surveillance. However, the game-changer came when the DC Circuit Court of Appeals ruled in favor of the sufficient surveillance mechanisms in place for futures markets in August 2023. This landmark decision paved the way for the approval of Bitcoin spot ETPs, which finally launched in January 2024. Ethereum ETPs followed suit in May 2024.
The Odds Could Change Quickly
As a researcher studying the impact of regulatory legislation on the cryptocurrency market, I’m closely monitoring the recent passing of the FIT21 Act in the US House. This act sets clear boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), providing much-needed guidance on how digital assets should be classified as commodities or securities. This legislative clarity could significantly influence the approval process for digitally traded product exchange-traded funds (ETFs), including those based on Solana and other digital currencies. The potential impact of this clarification extends beyond Bitcoin and Ether, potentially improving the odds of ETP approval for a broader range of digital currencies.
As a researcher examining the potential future of Solana Exchange-Traded Products (ETPs), I must acknowledge that the road ahead is filled with regulatory challenges and uncertainties. Alex Thorn from Galaxy Digital shares this perspective, noting that VanEck has a history of filing applications early for digital asset ETPs. For instance, they were the fourth filer in the last round of Bitcoin ETPs and the first to file for a spot Ethereum ETP. This proactive approach could imply that VanEck is optimistic about the outcome of ongoing regulatory decisions.
At press time, SOL traded at $147.54.
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2024-07-01 09:41