SEC's cautious stance raises uncertainties for Solana-focused investment products and broader digital asset ETFs.
Key Takeaways
- The SEC plans to reject spot Solana ETF applications and pause new crypto ETF approvals.
- The SEC's decision impacts multiple asset managers seeking to offer Solana-based investment products.
According to FOX Business reporter Eleanor Terrett, the SEC has informed at least two prospective ETF issuers that it will reject their applications for a spot Solana ETF. Sources also indicate that the SEC is unlikely to approve any new crypto ETFs “under the current administration.”
🚨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 revelation comes as multiple asset managers seek approval for investment products that track the spot prices of SOL, the fifth-largest crypto asset by market cap. Grayscale Investments is the latest firm to join the Solana ETF race.
On Tuesday, Grayscale filed with the SEC to convert its Solana Trust, which manages over $134 million in assets, into a spot ETF under the ticker GSOL.
Many other asset managers, including VanEck, 21Shares, Bitwise, and Canary Capital, have also submitted applications for Solana ETFs.
The surge in applications indicates strong interest across fund managers in diversifying their investment products, aiming to provide their investors with more crypto ETF offerings beyond spot Bitcoin and Ethereum ETFs.
In addition to the Solana funds, XRP ETFs are also gaining traction. A number of firms, including Bitwise, Canary Capital, and WisdomTree, are pursuing the regulatory nod.
Yet, whether or not these ETFs will enter the market will ultimately depend on the SEC’s assessment of the underlying crypto assets, here SOL and XRP. In August, the SEC formally rejected Cboe BZX’s filings for two Solana spot ETFs due to concerns about Solana’s classification as a security.
The securities watchdog, under SEC chair Gary Gensler’s leadership, has adopted a highly restrictive approach to crypto assets. For ETF issuers who were through the Ethereum ETF review process, a potential rejection of spot Solana ETFs is not entirely unexpected.
SOL, along with ADA and MATIC, were previously classified as securities as part of the SEC’s lawsuits against Binance and Coinbase. However, a recent court filing in the Binance case showed that the SEC wanted to stop pursuing a determination on whether Solana was a security.
With Gensler set to leave next month, Trump’s nominee for SEC chair, Paul Atkins, could spark renewed optimism about a spot Solana ETF or an XRP ETF once the appointment is confirmed by the Senate. Disclaimer
