VanEck, a leading asset management firm, has confirmed that it has submitted an application for a Solana ETF to the US Securities and Exchange Commission (SEC). However, due to insufficient decentralization, SEC regulatory issues, and the lack of a SOL futures ETF, the author believes that it will be a long-term battle to get approval.
In their application, VanEck stated that SOL is a commodity similar to Bitcoin and Ethereum, citing its high throughput, low fees, robust security, and strong community support as factors that make Solana an attractive investment option.
However, Bloomberg analyst James Seyffart believes that the chances of a SOL ETF being approved this year are almost zero. He points out that the inflow of funds into SOL would be significantly less compared to the inflow seen by an Ethereum ETF.
Wintermute, a cryptocurrency market maker, founder Evgeny Gaevoy also shares the view that the chances of a SOL ETF being approved this year are very low. He believes that once you see the amount of funds flowing into an Ethereum ETF, you will understand that the inflow into SOL would be even less.
The author also believes that the probability of a Solana ETF being approved in the short term is low for several reasons. Firstly, Solana’s decentralization is lacking as it requires high-performance hardware and expensive data centers to operate nodes. Additionally, the large holdings of Solana by institutions and the historical price collapse during the FTX incident may raise concerns about its decentralization and lead to it being classified as a security.
Another issue is regulatory concerns. Bitcoin and Ethereum have established themselves in the cryptocurrency market through the proof-of-work (PoW) consensus mechanism, which other projects find difficult to replicate. If the SEC approves a Solana ETF, it may be challenging to reject similar applications for thousands of other public chains. The ability of regulatory bodies to handle the potential flood of cryptocurrency ETFs is also a significant concern, and it may take several years to come up with viable solutions.
Furthermore, the lack of a SOL futures ETF is a barrier. In the history of creating Bitcoin and Ethereum spot ETFs, the market usually requires the existence of a futures ETF before applying for a spot ETF. Therefore, even if a Solana futures ETF is launched, it would take a considerable amount of time for it to establish a trading track record and prove sufficient liquidity and transparency to the market.
Taking all these factors into consideration, the author believes that the chances of a Solana ETF being approved in the short term are slim. VanEck’s application may be more focused on gaining attention and publicity. Further observations are needed.