By Michael Scott
VanEck executive is optimistic that Solana ETFs will be next in line for the spot ETF issuers in the US following its approval in Brazil.
With the approval of Bitcoin and Ethereum spot exchange-traded funds (ETFs) to allow trading within the US, multiple fund providers have identified Solana as the next big target. The fund providers are likely to offer the Solana-based crypto ETFs.
Following the approval of Solana ETF by the Brazil regulator, experts are optimistic about the US counterpart emerging. Nonetheless, the timing remains unclear.
US Mulls SOL ETF Approval
Brazil is emerging as a trailblazer within the crypto ETFs at a time when the US, though a traditional financial powerhouse, emphasizes a cautious approach. The delay is attributed to the US Securities and Exchange Commission (SEC) navigating the crypto regulation.
Brazil and the US have a stark contrast in their respective regulatory stance. The divergence in regulatory stances ignites a fervent debate drawing investors and industry experts.
10X Research founder Markus Thielen acknowledges the significant progress realized toward unveiling a Solana ETF within the US. The executive notes that leading asset managers, VanEck and 21Shares, have already filed bids to the SEC. Nonetheless, submitting applications hardly guarantees the approvals are imminent.
Thielen considers the approval path complex, citing the SEC’s regulatory stance on cryptos such as Solana, which could be classified as securities, portraying uncertainty. Such a possibility is an existing challenge that could delay Solana ETF approval.
Solana needs a robust futures market that proved vital in approving the Bitcoin and Ethereum ETFs. Such may complicate and delay the process of approving Solana ETFs.
The digital assets research head at VanEck Mattew notes that Brazil’s move to approve the spot SOL ETFs ignited hopes for the US having a similar trajectory. Unlike the US, Brazil is a longtime pioneer in crypto assets. The country had successful initiatives such as digital sandboxes and spot Bitcoin ETFs bolstering innovation and competitiveness.
The approval of the SOL ETF in Brazil signals that the US counterpart is not just a mere possibility. Such is inevitable as the following block to secure ETF approval. Nonetheless, the US regulation should have a soft fork before unveiling the SOL ETF, assisted by the White House, since it controls the keys.
Concern in SOL’s Sharp Price Movement
Solana has witnessed sharper price movements over the past few years than Bitcoin and Ethereum. Notably, Solana saw its price plunge from $260 in 2021 to exchange hands at a brutal low of $8 in late 2022 following the sudden implosion of crypto exchange FTX.
Solana would retrace its steps and rise to exchange at $150 press time. The recent price movement shows SOL is more volatile than ETH and BTC, plunging 30% during the meltdown week.
Thielen considers that the high volatility of Solana scares investors, leading to a preference for exposure to Bitcoin. The preference of Bitcoin is a natural choice, given that it offers investors an established narrative for portfolio diversification.
Thielen considers that preference can influence investor behavior and acceptance of SOL ETFs within the financial market. The researcher believes the SEC’s role in the evolving landscape is critical. Such could play out through occasional shifts via court filings and political maneuvering.
The co-founder of Ripple-backed crypto custody protocol Palisade, Manthan Dave, considers the SEC has a lot under the hood before everything surfaces. The executive profiles the SEC as responsible for capital generation within the US. The Commission will likely monitor how Brazil, as an emerging market, will be watching how emerging react to the SOL ETF before the decision in the US.
Dave considers that, unlike the US SEC, Brazil’s Comissão de Valores Mobiliários (CVM), which is the SEC version, aligns with the mission of an emerging market regulator. Its interest involves capturing capital inflow. The US SEC’s priority is preserving the capital already within the country.
Renewed Optimism of Solana ETFs Approval
While observers are optimistic about the US approving Solana ETF, the timeliness is uncertain. VanEck’s Sigel rules out the existence of a policy pivot capable of accelerating the approval process.
Sigel considers the timeline uncertain until the US realizes concrete changes, including regulatory attitudes. Meanwhile, Dave considers SOL ETF approval by December an optimistic outcome.
Like Bitcoin and Ethereum ETFs, SOL ETFs promise to yield potentially sizable benefits to facilitate mainstream crypto adoption. It would expose investors to crypto without the challenges of directly purchasing and holding the assets.
The optimistic forecast of Solana ETFs emerged from the recent action by the SEC when the Commission shelved the allegation that SOL is security. The filing in the Binance lawsuit has experts indicating that the regulator plans to cool off on the SOL scrutiny.