Recent Developments
Following VanEck's recent application, the SEC has received another request to launch a Spot ETF for Solana. The latest application was submitted on June 28 by Swiss firm 21Shares, under the name 21Shares Core Solana ETF. This application aims to provide investors with direct access to Solana without holding the actual crypto asset.
Details of the Spot Solana ETF
The 21Shares Core Solana ETF is designed to give investors exposure to Solana's price movements without owning the cryptocurrency itself. Unlike futures-based ETFs, which speculate on the future price of Solana, a Spot ETF directly tracks the current price of SOL. However, similar to the Ethereum Spot ETF, investors in the Solana Spot ETF will not earn additional returns from staking, an activity that helps maintain network decentralization and provides rewards to direct holders of the cryptocurrency.
Coinbase, a well-regulated and publicly traded U.S. crypto exchange, will handle the custody of the SOL assets held by the ETF, ensuring a high level of security.
Background on 21Shares and SEC's Stance
21Shares is a Zurich-based fintech company known for its crypto-based financial products, including futures on Bitcoin and Ethereum. Expanding to include Solana in their offerings aligns with their strategy to increase exposure to cryptocurrency-based products.
Historically, the SEC has viewed Solana as an unregistered security. However, this perception has evolved following the approval of the Ethereum Spot ETF, though doubts remain. Some speculate that Ethereum’s approval was influenced by political pressures, which might not apply to Solana. In anticipation of potential SEC disapproval, firms like VanEck and 21Shares are preparing legal defenses.
Market Reaction
The market has responded positively to these Spot ETF applications for Solana. Following VanEck’s submission, Solana's price rose from approximately $140 to $150. As of now, SOL is trading at $147.29, with expectations that this news could drive the price higher.
Attention remains on the SEC's decision regarding the Ethereum Spot ETF, as its approval could positively impact the likelihood of a Solana ETF being approved. Political influences, such as those from pro-crypto campaigns, might also play a crucial role in the final outcome.
Challenges and Considerations
Despite the optimism, the proposed Solana and Ethereum Spot ETFs have limitations due to the absence of staking returns, which could affect their adoption rates. Both Solana and Ethereum are layer-1 blockchain networks, meaning they directly compete for investment capital. This competition might influence market dynamics and investor decisions.
The SEC's upcoming decisions on these ETF applications are highly anticipated, with significant implications for the broader crypto market. While there are challenges, the introduction of Spot ETFs for Solana and Ethereum marks a crucial step in the evolving landscape of cryptocurrency investments.