Grayscale's application puts it in competition for SEC approval alongside other firms like 21Shares and Bitwise.
Grayscale Investments has submitted an application to the U.S. Securities and Exchange Commission (SEC) to convert its existing Solana Trust into a spot Solana exchange-traded fund (ETF). If approved, the spot Solana ETF (ticker symbol: GSOL) will be listed on the New York Stock Exchange (NYSE).
Grayscale's application puts it in direct competition with other players in the field, including 21Shares, Canary Capital, VanEck, and Bitwise, all of which are vying for approval from the U.S. Securities and Exchange Commission to launch similar cryptocurrency ETFs.
The rise of the Grayscale Solana Fund
Grayscale's Solana Trust has become one of the largest Solana investment products in the market, holding approximately $134.2 million in assets. According to Grayscale, the trust controls about 0.1% of all circulating Solana (SOL) tokens. This application comes at a time when Solana's price shows signs of recovery, having risen 4.5% in the past 24 hours to a value of $237.
Grayscale noted in its filing that the ETF's custodian may be Coinbase Custody, while BNY Mellon Asset Servicing will be responsible for managing the ETF. This structure follows the model Grayscale used for its Bitcoin and Ethereum ETFs.
Earlier this year, Grayscale successfully converted its Bitcoin Trust (GBTC) into an ETF, marking the beginning of a new era for cryptocurrency-based ETFs. The Bitcoin ETF began trading in January 2024 and currently has a net asset value of $20.59 billion.
Grayscale also launched an Ethereum ETF earlier this year. As of December 3, 2024, Grayscale's Ethereum ETF has assets under management of $5.34 billion.
The potential of Solana in the ETF market
Despite Solana's strong market performance, it faces challenges in achieving adoption levels comparable to Bitcoin and Ethereum. The Solana ETF may not immediately attract the same level of attention or investor interest, but the recent rise in Solana's price indicates strong demand for the asset.
It is worth noting that the U.S. Securities and Exchange Commission has taken a cautious approach to approving spot cryptocurrency ETFs, especially for altcoins like Solana, due to concerns about market manipulation, liquidity, and investor protection. However, some experts believe that the situation could change during Donald Trump's presidency.
Although Solana's price has recently retreated from its all-time high of $260, it remains one of the most popular altcoins in the market. The price drop is primarily attributed to market rotation, especially as XRP's market capitalization surpassed Solana's.
