Strategic move or reckless optimism? The first application for Solana ETF filed in the US

VanEck filed an S-1 document with the U.S. Securities and Exchange Commission (SEC) to create a spot Solana-ETF. How does the crypto community react?

The document says VanEck’s Solana ETF is called the VanEck Solana Trust. If approved, the product will be traded on the Cboe BZX platform. The fund does not provide for SOL staking — all shares of the fund will be sold and redeemed only for cash.

VanEck is one of the first U.S. asset managers to offer investors access to international markets, investments in gold, emerging markets, and ETFs. VanEck is one of the companies that has launched a Bitcoin ETF and expects to launch its own ETF for Ethereum. However, the firm’s ETF filing for Solana is the company’s first and only.

Why Solana ETF?

VanEck’s head of digital asset research, Matthew Sigel, explained why the firm decided to launch a Solana ETF. First, he pointed to scalability, high speed, and low fees, which provide massive potential for a better user experience.

“We believe the native token, SOL, functions similarly to other digital commodities such as bitcoin and ETH. It is utilized to pay for transaction fees and computational services on the blockchain.”

Matthew Siegel, VanEck’s head of digital asset research

He added that, due to its high utility, VanEck is confident that SOL will be helpful to a broad audience, including investors, developers, and even ordinary business people looking for an alternative to diversify their portfolios.

“The broad range of applications and services supported by the Solana ecosystem, from decentralized finance (DeFi) to non-fungible tokens (NFTs), underscores SOL’s utility and value as a digital commodity.”

Matthew Siegel, VanEck’s head of digital asset research

Matthew Siegel, VanEck’s head of digital asset research

Another player in the ETF arena

VanEck has entered the race to launch a spot Solana-ETF amid anticipation of the launch of a similar fund for Ethereum. According to preliminary estimates, investors may have access to it in July.

Amid the approval of the launch of spot Ethereum-ETFs, the SEC dropped its claims against the project.

VanEck is confident that SOL does not violate U.S. securities laws. Therefore, according to the authors, the SEC has no reason to refuse to launch the spot Solana ETF.

At the same time, GSR Markets analysts are confident that the Solana spot ETF will absorb 2% and 5% of Bitcoin funds in the bear market and benchmark scenarios, respectively. This will increase the price of Solana by 1.4 and 3.4 times. The report states that Solana’s growth potential is significant, with the potential for substantial market value and price increases.

Source: GSR Market

“While a spot Solana ETF could see inflows as a percentage of Bitcoin’s of 2%, 5%, or 14% under a bear, baseline, and blue sky scenario, respectively, we must now adjust the impact a spot ETF may have on SOL for its size smaller, which we do use market cap. Specifically, Solana’s market cap has averaged just 4% of Bitcoin’s over the last year.”

GSR Markets analysts

How do experts react?

Bloomberg analyst Eric Balchunas says that the chances of launching spot Solana ETFs may fall because the list of investment instruments on SOL is inferior to Ethereum. 

However, a change in the American president could lead to liberalization of the crypto industry. Therefore, Solana exchange-traded funds will likely be approved only in 2025.

FOX journalist Eleanor Terrett reminded us that SOL has yet to be traded in a regulated futures market, unlike BTC and ETH, so approval is still far off. However, VanEck can say that it was the first to apply for the first U.S. Solana ETF.

Venture capitalist Anthony Pompliano called VanEck’s filing further evidence that altcoins are coming to Wall Street. Analyst Lark Davis is also confident that the long-awaited bull run will emerge amid the race to launch new spot altcoin ETFs.

Will Solana ETFs be approved?

The crypto market is awaiting a decision on spot Ethereum ETFs. Negotiations between asset managers and regulators are now entering their final stages.

However, things are more complicated in the Solana ETF case. Since there are no futures ETF for Solana in the U.S., unlike Bitcoin and Ethereum. Futures products based on these crypto assets appeared earlier than spot ETFs. This approach is explained by the SEC’s concerns about possible fraud and market manipulation.

Consequently, the Solana based spot ETF faces a more difficult road before being admitted to the market.

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