VanEck Applies to Launch a Spot Solana ETF in the US, SOL Price Rockets 5%

The price of SOL rocketed by 5% in a matter of minutes after VanEck, an investment management firm commanding $89.5 billion in assets

Investment management firm VanEck, which boasts $89.5 billion in assets, has filed an application to launch a spot Solana (SOL) ETF in the United States, leading to a 5% surge in the price of SOL within minutes.

On July 27, VanEck filed an S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) to launch the VanEck Solana Trust. The exchange-traded fund (ETF) will directly invest in and hold Solana (SOL).

“The Trust's investment objective is to reflect the performance of the price of Solana (‘SOL’) less the expenses of the Trust's operations,” the filing states. “In seeking to achieve its investment objective, the Trust will hold SOL and will value its Shares daily.”

However, VanEck explicitly stated that it does not plan on staking any of the prospective fund’s underlying SOL.

“Neither the Trust nor the Sponsor, the SOL Custodian, or any other person associated with the Trust will, directly or indirectly, engage in any action where any portion of the Trust's SOL is used to earn staking rewards, to earn additional SOL or to generate income or other earnings.”

According to The Defiant's crypto price feeds, the price of SOL has increased by 6% in one hour.

Commodity or security?

While many observers have suggested that Solana could be a strong candidate to become the third cryptocurrency to be used as the basis for a spot ETF, some analysts believe that the SEC's recent attempts to classify SOL as a security could harm its chances.

In both of its lawsuits against Coinbase and Kraken, two major US exchanges, the SEC last year described SOL as an unregistered security asset.

“SEC isn't dancing around SOL's status like they have ETH,” tweeted James Seyffart, an ETF analyst at Bloomberg. “Those lawsuits against COIN and Kraken and others flat out say ‘Solana is a security’.”

In contrast, the SEC determined Bitcoin and Ethereum, the cryptocurrencies for which the launch of spot ETFs was approved by the SEC, to be sufficiently decentralized to constitute commodity assets in 2018.

However, Matthew Sigel, head of digital assets research at VanEck, stated that he believes SOL to be a commodity asset.

“We believe the native token, SOL, functions similarly to other digital commodities such as Bitcoin and ETH,” tweeted Sigel. “It is utilized to pay for transaction fees and computational services on the blockchain. Like Ether on the Ethereum network… the broad range of applications and services supported by the Solana ecosystem...underscores SOL's utility and value as a digital commodity.”

“No single intermediary or entity operates or controls the Solana network, a principle referred to as decentralization,” Sigel continued. “SOL’s decentralized nature, high utility, and economic feasibility align with the characteristics of other established digital commodities, reinforcing our belief that SOL may be a valuable commodity.

However, when approving the ETFs, the SEC also noted the existence of regulated futures products that track Bitcoin and Ethereum and highlighted the strong correlation between the products' shares and the spot market prices of BTC and ETH.

There are currently no regulated Solana futures products available for trade in the United States.

Spot Ether ETFs are approaching

The news follows the SEC's preliminary approval of spot Ethereum ETF applications last month, with a final greenlight for the funds’ S-1 registration statements anticipated by the end of summer.

On July 26, Reuters reported that spot Ether ETFs could be hitting the market as early as the first week of July.

Citing two anonymous “industry executives,” the outlet said that the SEC is now only requesting “minor… finishing touches” on the applications at this stage, putting the final approval “probably not more than a week or two away.”

Eric Balchunas, an ETF analyst at Bloomberg, tweeted that he is optimistic about the July 2 timeline.

“VanEck just filed an 8-A form for spot ETH, which is part of the process,” he noted. “Notably, they filed their 8-A for spot Bitcoin exactly seven days before its launch. This is a good sign for our July 2 prediction.”

The SEC also permitted spot Bitcoin ETFs to begin trading in January. According to Sosovalue, the second has since attracted cumulative inflows of $14.5 billion.

Galaxy Research, a major digital asset analysis firm, anticipates that once trading begins, spot Ether ETFs will draw in net monthly inflows of $1 billion.

“We expect the net inflows into ETH ETFs to be 20-50% of the net inflows into BTC ETFs over the first five months, with 30% as our target, implying $1 billion/month of net inflows,” stated Charles Yu, an analyst at Galaxy Research.

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