Bloomberg Analyst Says Spot Solana ETF Needs New SEC Leadership

According to Eric Balchunas, a Bloomberg ETF analyst, the prospect of launching a spot Solana ETF in the United States may hinge on changes in the federal administration and the leadership of the SEC.

On June 27, VanEck filed with the SEC for a spot in the Solana ETF. VanEck’s head of digital assets research, Matthew Sigel, announced the new fund, the VanEck Solana Trust. The fund will leverage Solana’s decentralized nature, high utility, and economic viability.

However, Balchunas expressed skepticism about the ETF’s approval. He noted that the SEC has yet to approve any future Solana ETFs, which raises doubts about approving a spot ETF. Historically, the SEC has approved futures products for Bitcoin (BTC) and Ethereum (ETH) before considering spot ETFs due to fraud and market manipulation concerns.

Potential Shift in Regulatory Environment

Balchunas speculated that a new U.S. President and changes in SEC leadership in 2025 could create a more favorable environment for the approval of spot Solana ETFs. He mentioned on social media that appointing someone like Hester Peirce to lead the SEC could positively influence the regulatory landscape for such products.

The knee jerk reaction here is 'oh this will never be approved bc there aren't Solana futures' agree but.. if change at POTUS i think anything poss. Just imagine Hester Peirce (or someone like that) running the SEC..

— Eric Balchunas (@EricBalchunas) June 27, 2024

Supporting this view, Jake Chervinsky, chief legal officer at Variant Fund, noted that Peirce’s interpretation of the Securities Exchange Act might be more accommodating for spot Solana ETF applications.

While the U.S. regulatory environment remains uncertain, Solana exchange-traded products (ETPs) are already available globally. According to Bloomberg ETF analyst James Seyffart, over $1 billion worth of Solana ETPs are traded worldwide, including the 21Shares Solana Staking ETP and the ETC Group Physical Solana product in Europe.

Industry Reactions and Market Outlook

The filing for a spot in Solana ETF has sparked varied reactions within the industry. Anthony Pompliano, a Bitcoin advocate, viewed VanEck’s move as an indication of growing interest in altcoins on Wall Street. However, others remain cautious.

Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, suggested that clarifying Solana’s security status would have been prudent before filing for an ETF. The SEC echoed this sentiment, having previously labeled SOL security in lawsuits against Binance and Coinbase.

Should Solana get an ETF at some point? Absolutely.

But this is also reckless by VanEck, when futures volume, unsettled SEC claims, etc are outstanding with Solana.

Really hope this isn’t giving Gensler an easy setup. https://t.co/93TkQLAl66

— Adam Cochran (adamscochran.eth) (@adamscochran) June 27, 2024

Evgeny Gaevoy, CEO of cryptocurrency trading firm Wintermute, predicted minimal inflows for the spot Solana ETF compared to the projected low inflows for soon-to-be-launched spot Ether ETFs. Gaevoy emphasized the time required for adoption despite Wintermute’s long positions in both SOL and ETH.

Despite the current regulatory hurdles, the interest in Solana ETFs remains strong. Recently, cryptocurrency asset manager 3iQ filed for a spot in Solana ETF in Canada, marking a North American first. Additionally, Franklin Templeton, a $1.5 trillion asset manager, has praised the Solana ecosystem, indicating continued confidence in its potential.