Beijing time, June 28th, Jessy, VanEck launched the VanEck Solana Trust and submitted a Solana spot ETF application to the SEC.
Interestingly, this is the first time that a spot ETF application for SOL has been submitted, as there were no previously approved and listed futures ETFs for Solana. Is this submission of the Solana spot ETF just a hype?
VanEck, the issuer of approved BTC and ETH spot ETFs in the US, has now submitted a Solana spot ETF to the SEC. Based on the remarks of VanEck’s Director of Digital Asset Research on X, the reason for applying for a Solana spot ETF is mainly due to their strong belief in Solana’s technology and its potential as a widely used digital commodity with a large customer base.
According to the application, the VanEck Solana Trust is expected to be listed on the Cboe BZX Exchange, subject to issuance notice.
What’s interesting is that VanEck didn’t follow the usual pattern this time. Instead of applying for SOL futures, they directly applied for a spot ETF, which may affect the SEC’s approval process. From this, we can see that the approval of the Solana spot ETF still has a lot of uncertainty. Another uncertainty is that the SEC has previously stated in a lawsuit that SOL is an unregistered security.
Other factors that may affect the SEC’s judgment on the Solana spot include its lack of decentralization. Solana’s decentralization is not as strong as Bitcoin and Ethereum, especially considering FTX’s significant holdings of Solana. Furthermore, its market capitalization is significantly smaller compared to Bitcoin and Ethereum, indicating poor liquidity.
So, is VanEck’s filing for a Solana spot ETF just a hype? Actually, it’s not.
First of all, Solana is a dark horse in this bull market, attracting attention and being favored by Wall Street capital. Analysts pointed out that Solana’s high throughput, low transaction fees, and security make it a potential target for ETFs.
Why Solana and not other coins? Previously, LTC, BCH, and DOGE were considered strong candidates for the next wave of spot ETFs. The reason is simple: the usual process for approving virtual currency spot ETFs is for the coin to first have futures listed by the US CFTC, then futures ETFs, and finally spot ETFs. Currently, besides BTC and ETH, the only futures that have been approved and listed after submitting the required documents to the CFTC are LTC, BCH, and DOGE. However, these three tokens are traded not on CME, but on derivatives exchanges owned by Coinbase. These three tokens have also not been recognized as securities by the SEC, so the industry believes that it may be their turn for spot ETF approval.
However, we seem to only pay attention to the compliance process and underestimate the role of capital in spot ETFs. Robbie Mitchnick, Head of Digital Assets at BlackRock, has explicitly stated that institutional clients’ demand determines BlackRock’s advancement in cryptocurrency products. In other words, fund companies will vigorously promote a specific token only when institutional clients favor it.
Analyzing the cryptocurrency-related ETNs (Exchange Traded Notes) issued by Vaneck, we found that SolanaETN, besides Bitcoin and Ethereum, has the highest demand (asset under management) among users. This helps us understand why Vaneck and other fund companies are pushing for a Solana spot ETF, rather than tokens that appear to be more compliant in terms of the process.
Although the launch of the Solana spot ETF currently faces significant uncertainty, if there is a change in the US government leadership, especially with a SEC supportive of cryptocurrencies, there is a chance for the Solana spot ETF to be approved. The US election is truly affecting the cryptocurrency market.
And after the approval of the Solana spot ETF, what will happen to the price of SOL? GSR’s report evaluation indicates that in a bear market, benchmark, and ideal scenarios, the inflow of funds into the Solana spot ETF as a percentage of Bitcoin’s inflow would be 2%, 5%, and 14% respectively. Additionally, Solana’s market cap has averaged 4% of Bitcoin’s market cap over the past year. In a bear market, SOL could potentially increase by 1.4 times, 3.4 times in benchmark conditions, and 8.9 times in ideal conditions.
Perhaps next year, with a new leadership team at the SEC, the Solana spot ETF will be launched. But everything is unknown.