The SEC pauses Solana ETF approval process after discussions on its security classification, as withdrawal of filings delays any immediate prospects.
As noted by Colin Wu, the U.S. Securities and Exchange Commission (SEC) has paused the approval process for Solana-based exchange-traded funds (ETFs). Recent discussions with potential issuers raised concerns about whether Solana (SOL) should be classified as a security, a classification that has previously led to significant regulatory challenges.
As a result, filings submitted to initiate the approval process were withdrawn by Cboe BZX, stalling any immediate prospects for Solana ETFs.
According to TheBlock, the U.S. SEC discussed concerns with ETF issuers that Solana might be classified as a security. The SEC subsequently agreed with Cboe and decided not to submit the relevant 19b-4 form to avoid initiating the approval process. VanEck's S-1 registration…
— Wu Blockchain (@WuBlockchain) August 20, 2024
This decision comes after Ethereum and Bitcoin ETFs were successfully approved, further emphasizing the hurdles for Solana under the current administration. Market observers had anticipated this delay, considering the SEC’s stance that Solana may be a security.
For instance, Nate Geraci, president of The ETF Store, and James Seyffart, a prominent ETF expert, previously suggested that approval for Solana ETFs is unlikely during the Biden administration.
Geraci indicated that the administration’s stance could impact any new developments, with Seyffart noting the first possible chance for a Solana ETF might not arise until 2025 or later.
Removal of Filings Halts Approval Process
The removal of the 19b-4 filings for Solana ETFs has effectively frozen the approval process. According to familiar sources, these filings are critical for securing regulatory clearance and starting the clock for the SEC’s formal review.
By withdrawing the forms, Cboe BZX and the SEC have avoided initiating any countdown toward a decision. Market participants noticed the absence of these filings over the weekend, with related documents no longer appearing on the Cboe website or the Federal Register.
Meanwhile, VanEck’s S-1 registration statement for its Solana ETF remains on the SEC’s EDGAR system, although other issuers’ filings, such as 21Shares, are less accessible. Despite the paused filings, some issuers are likely to regroup and attempt another push for approval.
To do so, they must navigate complex listing requirements, including the establishment of a Commodity Futures Trading Commission (CFTC)-regulated market for Solana, which remains a barrier.
VanEck’s Solana ETF Proposal
It is important to remember that VanEck, known for its Bitcoin and Ethereum ETFs, officially submitted a Solana ETF application in July. The firm believed that Solana’s blockchain offers distinct advantages in scalability, low transaction costs, and speed.
By drawing comparisons to Ethereum, VanEck positions Solana as a strong candidate for a commodity-based classification, arguing that SOL shares characteristics with Bitcoin and Ethereum, which are not considered securities.
However, experts like Seyffart suggest that while demand for a Solana ETF is expected to grow, it will take several years and may depend on a new regulatory landscape.
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