The Cboe BZX Exchange has rekindled the competition for Solana-based exchange-traded funds by filing a fresh set of proposals on behalf of four prominent investment companies earlier this week.
The SEC has restarted its review process for Solana investment products by filing 19b-4 documents for the Canary Solana Trust, Bitwise Solana ETF, 21Shares Core Solana ETF, and VanEck Solana Trust. This comes after the withdrawal of similar applications last year at the regulator’s request.
These proposed ETFs would offer a way for conventional investors to tap into Solana’s potential without directly owning the cryptocurrency, which could broaden participation in the digital asset space.
This advancement leverages the growing traction of cryptocurrency exchange-traded funds, following the successful SEC approval of Bitcoin and Ethereum-based ETFs in the first part of 2024.
Solana is confronted with unique regulatory hurdles that set it apart from Bitcoin and Ethereum. A crucial concern is how Solana will be categorized – as a commodity or a security – a classification that has played a significant role in determining the fate of previous ETF applications
The Canary Solana Trust and VanEck Solana Trust are requesting authorization within commodity-backed trust systems, mirroring the effective approaches used for Bitcoin and Ethereum exchange-traded fund (ETF) offerings. These proposals assert that Solana can be classified as a commodity because of its decentralized system and proof-of-stake consensus mechanism.
Both proposals claim that manipulation can be avoided without relying on the standard surveillance-sharing arrangements mandated by the SEC, instead pointing to the high levels of trading activity and the continuous operation of global markets as sufficient deterrents.
Although both sponsors stress SOL’s status as a commodity and its maturity in the market, they have different strategies when it comes to addressing regulatory issues. VanEck points out the decreasing concentration of ownership and the independence of validators, noting that major wallet holdings decreased to 26.5% the previous year. On the other hand, Canary concentrates on implementing operational protections like segregated cold storage and accurate NAV calculations its product within existing frameworks for crypto-commodity ETFs.
In a separate move, Grayscale is also pursuing the conversion of its Solana Trust into an exchange-traded fund (ETF) listed on NYSE Arca, marking another step forward in its bid to launch a Solana ETF.
Solana’s latest drive for growth coincides with its continued ranking as the third-largest digital currency, boasting a market value exceeding $111 billion, as reported by CoinGecko.
