The US Securities and Exchange Commission (SEC) has dealt a significant blow to the cryptocurrency market by rejecting the Chicago Board Options Exchange (CBOE) Solana ( $SOL ) spot ETF application.

The decision, which was reported by The Block, marks another setback in the ongoing efforts to bring spot ETFs based on cryptocurrencies to the US market. While there have been several attempts, the SEC has consistently raised concerns about market manipulation, investor protection, and the potential for fraud.

CBOE had previously filed 19b-4s documents with the SEC in July to list the Solana (SOL) spot ETF of VanEck and 21Shares. However, the application was subsequently removed from CBOE's website, signaling that the SEC had raised objections.

According to sources familiar with the matter, the SEC's concerns centered around the potential risks associated with Solana, including its volatility and the potential for market manipulation. The regulator has previously expressed similar concerns about other cryptocurrencies, such as Bitcoin and Ethereum.

While the rejection of the Solana ETF application is a setback, it does not necessarily mean that all spot ETF applications will be denied. The SEC has indicated that it is open to approving spot ETFs if the applicants can demonstrate that they have adequate safeguards in place to protect investors.

However, the ongoing regulatory scrutiny of the cryptocurrency market suggests that it may be some time before spot ETFs become a reality in the US. In the meantime, investors may continue to seek exposure to cryptocurrencies through other means, such as futures contracts or exchange-traded notes (ETNs).

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