CoinWorld.com reports:
Around 9 pm last night (27th), asset management giant VanEck confirmed that it has submitted the application documents for the VanEck Solana Trust to the U.S. Securities and Exchange Commission (SEC). The fund will issue equity-based common shares and is expected to be listed for trading on the Cboe BZX Exchange, pending further issuance notice.
In response, Matthew Sigel, Director of Digital Asset Research at VanEck, explained the application in a post on X. Here is the translation of the full text:
“I am pleased to announce that VanEck has just applied for the first Solana Exchange Traded Fund (ETF) in the United States. Here are some thoughts on why we believe SOL is a commodity.
Why are we applying for a Solana ETF?
As a competitor to Ethereum, Solana is an open-source blockchain software designed to handle various applications including payments, transactions, gaming, and social interactions. Operating as a single global state machine without sharding or layer-two solutions, its unique combination of scalability, speed, and low costs could offer better user experiences for many use cases.
With the ability to process thousands of transactions per second at minimal costs and employing advanced security mechanisms combining historical proof and proof of stake, we believe Solana stands out as a powerful and accessible blockchain software. The combination of high throughput, low costs, robust security, and a strong community atmosphere makes Solana an attractive choice for an exchange-traded fund, providing investors with exposure to a multifunctional and innovative open-source ecosystem.
Why do we consider SOL similar to commodities like Bitcoin and Ethereum?
We believe SOL’s native token functions similarly to other digital commodities such as Bitcoin (#Bitcoin) and Ethereum (#ETH). It is used for paying transaction fees and computational services on the blockchain. Similar to Ether on the Ethereum network, SOL can be traded on digital asset platforms or used for peer-to-peer transactions.
The wide range of applications and services supported by the Solana ecosystem, from decentralized finance (DeFi) to non-fungible tokens (NFTs), highlights SOL’s utility and value as a digital commodity. The Solana network is not operated or controlled by a single intermediary or entity, a principle known as decentralization.
Infrastructure for transaction verification and record-keeping is maintained by a diverse group of users, including numerous independent validators distributed globally. These validators are responsible for processing transactions and safeguarding the network, ensuring no single entity can monopolize the system.
The decentralized nature, high utility, and economic feasibility of SOL, similar to other established digital commodities, reinforce our belief in SOL as a valuable commodity. It offers multiple use cases for investors, developers, and entrepreneurs seeking alternatives to duopolistic app stores.
No participation in staking yet
It is also noteworthy that the SEC’s application states: the Trust, Sponsor, SOL Custodian, or any other person associated with the Trust, will not directly or indirectly take any action to stake any SOL held by the Trust to earn rewards or take any action to generate other income. Currently, the Trust only subscribes and redeems in cash form. (In other words, staking is not currently taking place.)
Bloomberg analyst: Opportunity for listing with new White House and SEC in 2025
Regarding VanEck’s application, Bloomberg analyst James Seyffart commented:
The first SOL ETF application in the United States has emerged, and it remains to be seen whether other issuers will immediately follow suit.
The initial thought is that the ETF could only launch if there’s a new government and SEC in 2025. Even then, there are no guarantees.
Around the same time, Evgeny Gaevoy, founder of cryptocurrency market maker Wintermute, also expressed his views:
He believes the chances of a SOL ETF being approved this year are almost zero (believing the Trump administration would prioritize this issue is quite foolish).
Gaevoy pointed out that once you see how much inflow there is into Ethereum ETFs this year, you’ll understand that the inflow into SOL will be even less.
SOL falls below $150
Inspired by this news last night, SOL briefly surged 8% to break through $150, before settling at $147.79 before the deadline.
Three reasons why SOL ETF needs a long-term struggle to pass
While the author also wishes to see more products in the market providing traditional finance access to the crypto market, I believe the short-term probability of a Solana ETF passing is still low, at least for the following reasons that need resolution:
1. Insufficient decentralization
Solana is known for its superior transaction speed and low costs, but these advantages come at the expense of some decentralization conditions. Currently, operating Solana nodes typically requires high-performance hardware infrastructure, leading to high operating costs, hence being referred to as a “server chain.”
Additionally, some institutions hold significant amounts of Solana, and the situation where holding large amounts of Solana led to a significant price drop in the FTX bankruptcy incident remains vivid. These factors may lead to Solana being perceived as insufficiently decentralized, thus facing the risk of being classified as a security.
2. SEC regulatory issues
Fundamentally, Bitcoin and Ethereum have strong dominance in the cryptocurrency market that other projects cannot replicate, primarily due to their gradual establishment through global miners using Proof of Work (PoW) mechanisms.
If the SEC approves the Solana ETF, it could potentially open the door for the difficulty in rejecting thousands of similar public chain applications. This may lead to an oversupply of cryptocurrency ETFs in the market, posing a significant question on whether regulatory agencies can withstand such pressure. Therefore, it may take several years of planning and preparation before feasible solutions are proposed by regulatory bodies like the SEC.
3. Lack of SOL Futures ETF
Based on historical data and market operations, it typically requires the establishment of futures ETFs before applying for spot ETFs, a precedent validated in the cases of Bitcoin and Ethereum. Rob Marrocco, Vice President of Cboe responsible for ETF listings, previously stated that without establishing a futures market or changing regulatory conditions, other cryptocurrencies like Solana are unlikely to obtain ETF approval.
Even if Solana launches a futures ETF, it will take time to establish sufficient trading records and prove adequate liquidity and transparency. This process could take quite a long time.
In conclusion, the author believes the likelihood of a Solana ETF passing in the short term is low. VanEck’s move may be more about attracting attention and publicity. Therefore, we need to continue observing developments.
