The U.S. Securities and Exchange Commission (SEC) has paused the approval process for the Solana ETF after debating its securities classification. Withdrawing the application would delay any near-term prospects.
As Colin Wu mentioned, the U.S. Securities and Exchange Commission (SEC) has put the approval process for a Solana-based exchange-traded fund (ETF) on hold. Recent discussions with potential issuers have raised concerns about whether Solana (SOL) should be classified as a security, a classification that has previously sparked significant regulatory challenges.
As a result, Cboe BZX withdrew the documents it had submitted to initiate the approval process, which put a damper on any near-term development of the Solana ETF.
The success of Ethereum and Bitcoin ETFs further highlights the current administration’s obstruction of Solana. Given that the SEC believes Solana may be a security, market observers had expected this delay.
For example, ETF Store President Nate Geraci and renowned ETF expert James Seyffart have previously said that it is unlikely that a Solana ETF will be approved under a Biden administration.
Geraci noted that the government’s stance could influence any new developments, while Seyffart suggested that the first opportunity for a Solana ETF might not come until 2025 or later.
Withdrawal of application to suspend approval process
The cancellation of the Solana ETF’s 19b-4 filings effectively freezes the approval process. These filings are critical to obtaining regulatory approval and launching a formal SEC review, according to people familiar with the matter.
By withdrawing the documents, Cboe BZX and the SEC avoided starting any countdown to a decision. Market participants noticed the absence of the documents over the weekend, with the documents no longer appearing on Cboe’s website or in the Federal Register.
Meanwhile, the S-1 registration statement for VanEck’s Solana ETF remains on the SEC’s EDGAR system, though filings from other issuers, such as 21Shares, are less readily available. While filings have been suspended, some issuers may reorganize and try again to get approval.
To do so, they must meet complex listing requirements, including establishing a Commodity Futures Trading Commission (CFTC)-regulated market for Solana, but this remains a hurdle.
VanEck’s Solana ETF Proposal
It is worth noting that VanEck, which is famous for its Bitcoin and Ethereum ETFs, formally submitted the Solana ETF application in July. The company believes that Solana's blockchain has unique advantages in scalability, low transaction costs, and speed.
By comparing it to Ethereum, VanEck positions Solana as a strong candidate for commodity-based classification, arguing that SOL shares characteristics with Bitcoin and Ethereum, which are not considered securities.
However, experts like Seyffart say that while demand for the Solana ETF is expected to grow, it will take years and may depend on the new regulatory environment.
