On June 28, VanEck launched the VanEck Solana Trust and submitted an application for the Solana spot ETF to the SEC.
Interestingly, SOL, which applied for a spot ETF this time, has not had its futures ETF approved and put online for trading before. Is the release of the Solana spot ETF submission news just a hype?
No futures ETFs have been launched and are considered securities
VanEck, which submitted the Solana spot ETF to the US SEC, is one of the issuers of the BTC and ETH spot ETFs previously approved by the US. Summarizing the speech of VanEck's digital asset research director at X, it can be concluded that the reason why VanEck applied for the Solana spot ETF is roughly because it is very optimistic about Solana's technology and sees its prospects for widespread use as a digital commodity and a large number of customers holding it.
According to the application documents, VanEck Solana Trust is expected to be listed and traded on Cboe BZX Exchange Ltd., subject to issuance notification.
An interesting thing is that VanEck did not follow the routine this time and applied for spot ETF directly instead of SOL futures, which may affect the SEC's approval process. From this point, we can also see that there is still a lot of uncertainty about the approval of Solana spot ETF. Another uncertainty is that the SEC has clearly stated in the lawsuit that SOL is an unregistered security.
Other factors that may affect the SEC’s judgment on Solana’s spot trading are its lack of decentralization. Solana’s decentralization is not as good as Bitcoin and Ethereum, especially since FTX previously held a large amount of Solana. Moreover, its market value is still far behind Bitcoin and Ethereum, which also indicates that its liquidity is poor.
In this light, is VanEck's filing of Solana's spot ETF with the SEC just a hype? In fact, it is not.
Institutional users support, US election may turn the tide
First of all, Solana, as the dark horse of this bull market, has attracted much attention and is favored by Wall Street capital. Some analysts pointed out that Solana's high throughput, low transaction fees and security make it a potential target for ETFs.
Why Solana instead of other coins? Previously, LTC, BCH and DOGE were all seen as strong candidates for the next wave of spot ETFs. The reason is simple. Generally, before the approval of virtual currency spot ETFs, they have to go through such a process: the US CFTC regulator first lists the currency futures, then the futures ETF, and finally the spot ETF.
After the CFTC submitted documents for approval, the futures that have been legally launched include BTC, ETH, LTC, BCH and DOGE. However, the actual trading of these three coins is not on CME, but on the derivatives exchange under Coinbase. The above three tokens have not been recognized as securities by the US SEC, so the industry believes that it may be the turn of these three coins to have their spot ETFs approved next.
However, we seem to only pay attention to the compliance of the process, but fail to realize the important role that capital plays in spot ETFs.
Robbie Mitchnick, head of BlackRock's digital assets, has clearly stated that the needs of institutional clients determine BlackRock's promotion of cryptocurrency products. In other words, if institutional clients favor a certain token, these fund companies will vigorously promote the spot ETF of this token.
We analyzed the cryptocurrency-related ETNs (index-linked securities) issued by Vaneck and found that Solana ETN is the ETN with the largest user demand (asset management scale) besides Bitcoin and Ethereum. It is easy to understand why other fund companies, including Vaneck, will vigorously promote Solana's spot ETF instead of those tokens that seem to be more correct in terms of process.
Although the launch of Solana spot ETF currently faces great uncertainty, if there is a change in the leadership of the US government, especially under the leadership of the SEC that supports cryptocurrencies, Solana spot ETF has a chance to be approved. The US election is having a real impact on the crypto market.
After the approval of Solana spot ETF, how will the price of SOL change? GSR released a report evaluating that if the capital inflow of Solana spot ETF accounts for 2%, 5% and 14% of Bitcoin inflow in bear market, benchmark and ideal conditions respectively, and Solana's market value accounts for an average of 4% of Bitcoin's market value in the past year, SOL may increase by 1.4 times in bear market, 3.4 times in benchmark conditions, and 8.9 times in ideal conditions.
Next year, perhaps with a new leadership at the SEC, the Solana spot ETF will be launched? But everything is unknown.
