VanEck has applied for a Solana cryptocurrency ETF. This makes them the first to aim for an ETF of one of the largest crypto tokens. Experts remain skeptical, though.
VanEck’s Application Details
VanEck submitted their ETF application to the U.S. SEC. If approved, the fund will buy SOL tokens to back its shares. According to the application, VanEck Solana Trust shares will trade on the CBOE exchange. Their price will track the SOL token using MarketVector’s benchmark data.
Solana’s Market Position
Solana is the fifth-largest crypto asset by market cap, trailing Bitcoin, Ethereum, Tether’s USDT, and Binance’s BNB. During peak periods, it has even surpassed BNB. Solana’s blockchain is known for high speed and low fees.
As of June 27, SOL trades at $148 with a market cap exceeding $68.5 billion. VanEck’s application news boosted SOL’s price by about 7%.
SEC’s Role in ETF Approvals
In January, the SEC approved spot Bitcoin ETFs from ten companies. Similar Ethereum ETFs are expected soon. The high demand for crypto to back these funds drove Bitcoin’s 2024 price surge.
VanEck, with $600 million in assets under management, launched a Bitcoin ETF and awaits approval for an Ethereum ETF. Their Solana ETF application is the first and only one.
Future of Solana ETFs
Some experts predict Solana will be the next asset for such funds if Ethereum ETFs succeed. However, discussions may not start until 2025. Standard Chartered’s Jeffrey Kendrick also sees Ripple’s XRP as a potential candidate.
VanEck analysts predicted SOL could reach $335 by 2023 under a “baseline” scenario or exceed $3200 under a “bullish” scenario. VanEck’s head, Matthew Siegel, stated they see Solana as a competitor to Ethereum due to its scalability, speed, and low costs.
Chances of Approval
ETF analyst James Seyffart suggests a Solana ETF could launch in 2025 if the White House and SEC leadership change. However, he warns there’s no guarantee. He noted that other companies might follow VanEck’s lead.
The SEC has no deadline for reviewing these applications. Unlike Bitcoin and Ethereum, Solana lacks futures ETFs, which supported the case for spot ETFs. Moreover, the SEC classified SOL as a security in a lawsuit against Binance. This led brokers like Robinhood to drop Solana, complicating its trade.
Wintermute’s founder, Evgeny Gaevoy, believes the chances of a Solana ETF in 2024 are nearly zero. He predicts low capital inflows into Ethereum ETFs, and even less for Solana funds, even if approved.
“I say this despite Wintermute’s positions in ETH and SOL. No misinformation, just a realistic view. The approval process takes time,” Gaevoy stated.
