The competition to launch the first U.S. Solana ETF has reignited, with the Cboe BZX Exchange submitting fresh 19b-4 filings on behalf of four major investment firms. These applications mark a renewed push for Solana-based ETFs, potentially providing institutional investors with exposure to SOL without directly holding the cryptocurrency.
Cboe BZX Refiles Solana ETF Applications
On Tuesday, the Cboe BZX Exchange resubmitted proposals for:
- Canary Solana Trust
- Bitwise Solana ETF
- 21Shares Core Solana ETF
- VanEck Solana Trust
These new filings restart the SEC’s review process after previous applications were withdrawn at the regulator’s request. If approved, these ETFs could significantly enhance Solana’s adoption among traditional investors, mirroring the success of Bitcoin and Ethereum ETFs.
Regulatory Hurdles: Commodity or Security?
Unlike Bitcoin and Ethereum, which have already received ETF approval, Solana faces unique regulatory challenges. The primary concern lies in whether Solana (SOL) is classified as a commodity or a security, a distinction that has played a crucial role in previous ETF approvals.
Both the Canary Solana Trust and VanEck Solana Trust aim to gain approval under commodity-based trust structures, arguing that Solana qualifies as a commodity due to its decentralized network and proof-of-stake consensus mechanism.
Key Arguments in ETF Proposals
- Market Maturity & Liquidity
- The proposals highlight Solana’s growing trading volume and global liquidity, arguing that market manipulation risks can be mitigated even without the traditional surveillance-sharing agreements required by the SEC.
- Decentralization & Validator Autonomy
- VanEck’s filing underscores Solana’s declining ownership concentration, showing that the top wallet holdings fell to 26.5% last year, reinforcing its decentralization.
- Investor Protection Measures
- Canary emphasizes cold storage security, NAV (Net Asset Value) calculations, and operational safeguards, ensuring robust investor protection.
Grayscale’s Competing Solana ETF Bid
Apart from these four filings, Grayscale is separately pursuing a Solana ETF, having applied in December to convert its existing Solana Trust into an ETF on NYSE Arca. Grayscale’s move adds another layer of competition to the evolving Solana ETF landscape.
Solana’s Growing Market Influence
Solana continues to strengthen its position as the third-largest cryptocurrency, with a market capitalization exceeding $111 billion, according to CoinGecko data. Its rising adoption and network efficiency make it a prime candidate for ETF approval, provided it overcomes regulatory scrutiny.
Conclusion: Will Solana Join Bitcoin and Ethereum in the ETF Market?
The Solana ETF race is gaining traction, but regulatory uncertainty remains a significant hurdle. With Cboe BZX resubmitting applications and Grayscale pursuing its own conversion, the coming months will be crucial in determining whether Solana secures its place in the ETF market alongside Bitcoin and Ethereum.
