TLDR
- SEC plans to reject spot Solana ETF applications from multiple issuers
- SEC likely to pause approval of any new crypto ETFs under current administration
- Grayscale recently filed to convert its $134M Solana Trust to spot ETF
- Multiple major asset managers including VanEck and Bitwise have pending Solana ETF applications
- SEC’s stance may shift with upcoming leadership change as Gensler set to depart
The Securities and Exchange Commission (SEC) has indicated it will reject applications for spot Solana exchange-traded funds (ETFs) and pause approvals for new crypto ETFs, according to sources familiar with the matter. The news, first reported by FOX Business reporter Eleanor Terrett, impacts several major asset managers who have submitted applications for Solana-based investment products.
Grayscale Investments, which manages over $134 million in Solana assets through its trust product, recently joined the race by filing an application to convert its Solana Trust into a spot ETF. The proposed fund would trade under the ticker GSOL, adding to the company’s growing lineup of crypto investment products.
The field of potential Solana ETF issuers includes well-known names in the investment industry. VanEck, 21Shares, Bitwise, and Canary Capital have all submitted applications to launch their own versions of Solana ETFs, showing strong interest from traditional finance in expanding crypto investment options.
These applications came as asset managers sought to diversify their crypto ETF offerings beyond Bitcoin and Ethereum products. The move reflects growing institutional interest in providing regulated investment vehicles for various digital assets.
🚨SCOOP: I’ve confirmed that the @SECGov has notified at least two of the five prospective issuers that it will reject their 19b4 filings for the $SOL spot ETFs.
The consensus here, I’m told, is that the SEC won’t entertain any new #crypto ETFs under the current administration.
— Eleanor Terrett (@EleanorTerrett) December 6, 2024
The SEC’s stance on Solana ETFs appears to stem from ongoing regulatory concerns. In August, the commission rejected Cboe BZX’s applications for two Solana spot ETFs, citing worries about Solana’s possible classification as a security.
The regulatory landscape for crypto assets remains complex under SEC Chair Gary Gensler’s leadership. The commission has maintained a cautious approach to crypto-related investment products, particularly regarding assets it views as potential securities.
Previous SEC actions have classified SOL, along with other cryptocurrencies like ADA and MATIC, as securities in lawsuits against major crypto exchanges Binance and Coinbase. However, recent developments suggest some flexibility in this position, as shown by an SEC court filing in the Binance case indicating the commission’s decision to stop pursuing a determination on Solana’s security status.
The news affects not only Solana-focused products but also other crypto ETF applications. Several firms, including Bitwise, Canary Capital, and WisdomTree, have submitted applications for XRP ETFs, adding to the growing list of pending crypto fund proposals.
For asset managers who have experience with the Ethereum ETF review process, the SEC’s position on Solana ETFs may not come as a surprise. The commission has consistently applied strict standards to crypto investment products.
The timing of these developments coincides with an upcoming leadership change at the SEC. Gary Gensler is scheduled to leave his position next month, with Paul Atkins nominated as his replacement.
Market observers note that the transition in SEC leadership could potentially lead to changes in the commission’s approach to crypto ETFs. Atkins’ appointment, which requires Senate confirmation, has sparked discussions about possible shifts in regulatory stance.
The SEC’s position affects both large and small asset managers looking to enter the crypto ETF market. These firms have invested time and resources in developing products that would allow traditional investors to gain exposure to digital assets through regulated channels.
For existing crypto investment products, like Grayscale’s Solana Trust, the news creates uncertainty about their ability to evolve into more accessible ETF formats. The trust structure typically trades at different prices than the underlying asset, while an ETF format could potentially offer more efficient pricing.
The development also impacts the broader crypto ETF landscape, as firms have been preparing various products beyond just Solana-focused funds. This includes applications for other single-asset funds and broader crypto investment vehicles.
The most recent information indicates that the SEC’s position will remain unchanged until at least the upcoming leadership transition, leaving the future of new crypto ETF approvals uncertain for the immediate term.
