Speculation about potential delays in spot Solana exchange-traded funds (ETFs) process grew after the disappearance of the ETF applications on the Chicago Board Options Exchange (CBOE) website over the weekend. New report confirms that the filing removal was due to the SEC’s stance on Solana (SOL).
Source familiar with the matter told The Block on Monday that the Securities and Exchange Commission (SEC) held discussions with prospective Solana ETF issuers, where the regulator expressed concerns about SOL potentially being classified as a security.
Some have noticed that the 19b-4 for the VanEck Solana ETF has been removed from the CBOE website.
Remember that Exchanges like Nasdaq & CBOE file rule changes (19b-4) to list new ETFs. Issuers like VanEck are responsible for the prospectus (S-1). Ours remains in play. https://t.co/9rbSHciSdy
— matthew sigel, recovering CFA (@matthew_sigel) August 19, 2024
Does Wall St. Love SOL?
Due to the SEC’s stance, the CBOE withdrew pending 19b-4 filings for Solana ETFs. The action effectively paused the approval process.
The removal came into notice on Friday following a report on X that the 19b-4 forms of VanEck and 21Shares, the only two firms to have filed for Solana ETFs, were no longer accessible on the CBOE website. The development came shortly after the exchange’s request for public comments.
Commenting on the withdrawal, Nate Geraci, President of the ETF Store, said it was a sign that a Solana ETF would not materialize under the current administration.
Scott Johnson, a finance lawyer, put his two cents in a classification disagreement, which could lead to SEC Chair Gary Gensler bypassing the regular process. “My guess on what is happening is Gary says SOL ETF is DOA under his watch,” said the expert.
Even before or after the removal discovery and confirmation from source, the SEC has provided no notices or comments on the matter.
SEC’s Stance on SOL
In its lawsuit against Binance, the SEC initially labeled several tokens, including Solana, as securities. The regulator argued that Solana’s deflationary model and promotional statements by Solana’s parent company aimed at stimulating demand for the token.
However, the SEC recently modified its complaint and sought to remove the need for the court to immediately determine if these tokens meet the securities criteria. The move sparked speculations that the SEC may no longer seek to label certain tokens, including SOL, securities.
Nevertheless, industry experts have weighed in. Jake Chervinsky, chief legal officer at Variant Fund, stated there is “no reason to think SEC has decided SOL is a non-security.” He believes the SEC’s move was a litigation tactic, not a change in policy.
Likewise, a16z Crypto’s Miles Jennings and Paradigm’s Justin Slaughter argued that people were overinterpreting the SEC’s filing amendment, as it doesn’t mean the SEC has decided Solana is not a security.
It’s also important to note that the SEC still refers to Solana, alongside other tokens, as securities in its lawsuits against Coinbase. New developments in Solana ETF application strengthen the belief that the regulator still considers SOL a security.
The SEC has classified Bitcoin as a commodity and it has been so far the only cryptocurrency to gain public approval from the regulator. In January, spot Bitcoin ETFs got the greenlight and started trading.
For Ether, while the SEC has not made any public statements regarding its legal status, except for a number of reported investigations into the associated entities, the approval of spot Ethereum ETFs in May indirectly states that Ether is a commodity, like Bitcoin.
For SOL, the case is more challenging and Solana ETFs face major regulatory hurdles compared to Bitcoin and Ethereum ETFs. The approval process for Solana ETFs is therefore uncertain, with many experts predicting delays or outright rejection under the current administration.
Despite the SEC’s stance, ETF issuer VanEck continues to argue that Solana is a commodity, similar to Bitcoin and Ethereum. Matthew Sigel, the firm’s head of digital assets research, said its Solana ETF is “still in play.”
ETF issuers may resubmit 19b-4 filings with stronger arguments against Solana being classified as a security, but the overall market is generally pessimistic about the chances of Solana ETF approval in the near future.
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