June 28, 2024 at 11:27 GMTModified date: June 28, 2024 at 11:27 GMT
June 28, 2024 at 11:27 GMT

First Solana ETF application in the US submitted by VanEck

By offering an ETF, VanEck hopes to tap into the growing demand and provide a convenient investment vehicle for those interested in Solana.

First Solana ETF application in the US submitted by VanEck

Leading investment management company, VanEck – known for its Bitcoin ETF – has recently filed an application to launch a Solana spot exchange-traded-fund (ETF) in the United States.

In doing so, it has become the first company to apply for a Solana ETF in the country.

The VanEck Solana Trust aims to provide investors with a way to gain exposure to the price movements of $SOL without having to directly purchase and manage the cryptocurrency

This could appeal to investors who are interested in Solana’s potential but are hesitant to deal with the complexities of owning and storing digital assets. 

By offering an ETF, VanEck hopes to tap into this growing demand and provide a convenient investment vehicle for those interested in Solana.

Notably, VanEck has categorised Solana as a commodity rather than a security. The filing indicated that the Trust will not stake the $SOL tokens for staking rewards. 

VanEck’s strategy

The primary objective of the VanEck Solana Trust is to mirror Solana’s price performance after accounting for operational expenses. 

The Trust will hold $SOL and value its shares daily based on the MarketVectorTM Solana Benchmark Rate. It will issue shares in blocks called “Baskets”, based on the net asset value (NAV) after deducting Sponsor fees and other expenses. 

Importantly, the Trust will not engage in staking activities. This means the Trust won’t earn additional SOL or generate income through staking rewards.

VanEck’s decision to apply for a Solana ETF comes as the company prepares for the anticipated launch of spot Ethereum funds in the US.

In May, the SEC greenlit a batch of Ethereum ETF filings, including one from VanEck. 

These ETFs are currently pending trading approval from the country’s regulatory watchdog. Bloomberg ETF analyst, Eric Balchunas, has predicted that the SEC will allow Ethereum ETFs to start trading as soon as next week.

Solana’s advantages

VanEck claims that Solana offers a superior user experience compared to Ethereum ($ETH). 

According to its head of digital asset research, Matthew Sigel, this marks a significant step forward in cryptocurrency investments. 

Sigel explained that Solana’s open-source blockchain is designed for diverse applications, including payments, trading, gaming, and social interactions. 

He also highlighted Solana’s high throughput, low transaction fees, strong security protocols, and vibrant community as key attributes.

Solana can handle a large number of transactions quickly and at a low cost. This makes it attractive for users who need efficiency and speed. The network’s security measures are also robust, ensuring the safety of transactions and user data. 

Additionally, Solana has a growing community of developers and users, which supports its ongoing development and adoption.

Approval prospects 

The approval of the Solana spot ETF faces challenges, particularly as $SOL lacks a futures ETF, unlike Bitcoin ($BTC) and Ethereum. 

The SEC previously labelled $SOL as a security, leading Robinhood, a US-based trading app, to delist it. 

Bloomberg ETF analyst, James Seyffart, suggested that the approval of the first Solana ETF might depend on changes in the SEC’s leadership and policies.

Balchunas, on the other hand, noted that a pro-crypto SEC leadership could facilitate approval. He mentioned that under a new presidential administration, the landscape could change significantly, possibly enabling the launch of Solana ETFs by 2025. 

The CLO of Variant Fund, Jake Chervinsky, added that the SEC could approve a spot crypto ETF without a futures market under new interpretations of the Exchange Act.

The news of VanEck’s application caused a significant price surge for $SOL, pushing it up by around 10% to nearly $150. 

According to Coinglass data, this price jump resulted in over $5 million in losses for short traders betting against $SOL within the past hour. 

Market experts view the application as a step towards mainstream financial acceptance of cryptocurrencies.

The application for the Solana ETF, if approved, could pave the way for other similar products and further integrate digital assets into the mainstream financial system.