Earlier in April 2022, the director of equity and cryptocurrency products at the Chicago Mercantile Exchange (CME) revealed during CryptoCompare’s Digital Asset Summit in London that the commodities exchange was “looking at” offering futures and other derivative products for altcoins such as Solana (SOL). Some traders considered the potential listing as a precursor to an eventual spot SOL exchange-traded fund (ETF).
However, a source familiar with the matter has clarified that the CME Group is not planning to list Solana futures soon. This news is a huge blow amid growing anticipation around the industry’s fifth-largest crypto receiving the ETF wrapper status in the US.
No Solana Futures
A widely-followed X user going by the online alias db (@tier10K) noted that the Chicago Mercantile Exchange has no plans to offer Solana futures, citing an individual privy to the issue.
Seasoned finance lawyer Scott Johnsson shared his two cents on the development, spotlighting the legal barriers that “Ethereum killer” Solana faces. He explained that while a Solana market ETF does not require the CME particularly to serve as the designated contract market (DCM), any prospective market would need a strong framework with a Custody and Security Services Agreement (CSSA) and adequate liquidity.
“ETF doesn’t need to be CME as the DCM that is listing (just one with a CSSA and liquid).”
Furthermore, Johnsson observed that the ongoing lawsuits against leading digital asset exchanges like Coinbase and Binance cast a dark cloud over the possibility of such a SOL product. The SEC has previously named Solana an unregistered security in its enforcement actions against Coinbase and Binance.
“No one is going to self-certify SOL as commodity futures so long as Coinbase/Binance enforcements are ongoing. Even if CME (or other DCM) self-certified, the current SEC could and would block,” Johnsson remarked.
The attorney further highlighted the need for a major shift in the SEC leadership or its regulatory policies before Solana could move toward an exchange-traded fund. “SOL really needs a change in admin to have a shot in the foreseeable future. Or the current SEC reversal goes way further than anyone is expecting. The former seems more likely,” opined Johnsson.
Bloomberg ETF strategist James Seyffart agrees with Johnsson’s opinion on the SEC’s perspective, adding that “This SEC isn’t gonna let anyone register Solana futures with the CFTC as ‘Commodities Futures’. They made that mistake with Bitcoin and Ethereum. I seriously doubt this admin does that again. They would very likely push back.”
Crypto futures allow investors to speculate on an asset’s price without physically holding the underlying asset. Investors use them to bet on price action and hedge against the asset’s volatility. Most believe that futures are a prerequisite to an ETF. As such, the news about the CME not planning to include Solana in futures markets slashes any hopes of SOL getting its exchange-tradeable spot vehicles in the foreseeable future.
The price of SOL traded rather flat following the report. At publication time, the token changed hands for $167.91, a 1.06% increase over the past 24 hours.