The U.S. Securities and Exchange Commission (SEC) has dealt a blow to Solana spot exchange-traded funds (ETFs), rejecting applications under the 19b-4 rule submitted by at least two of five prospective issuers. This decision, highlighted by Bloomberg ETF analyst Eric Balchunas, reflects the SEC’s conservative stance on cryptocurrency ETFs during Gary Gensler’s tenure as Chair.
Bloomberg Analyst Weighs In
Eric Balchunas noted that the SEC’s rejection aligns with its historically cautious approach to approving cryptocurrency ETFs. Despite a growing interest in digital asset markets, the SEC has limited its endorsements primarily to Bitcoin and Ethereum-based products, citing concerns over market integrity and investor protection.
Among the issuers affected are major firms like VanEck, 21Shares, and Canary Capital, which filed applications earlier in 2023. Balchunas emphasized that the denials underscore a broader hesitancy to approve products tied to altcoins like Solana, stating, “The SEC’s stance under Gensler has been restrictive, and this outcome doesn’t deviate from that trend.”
Hopes Pinned on New SEC Leadership
The cryptocurrency industry’s attention now turns to early 2024, when Paul Atkins is set to assume the role of SEC Chair following Gary Gensler’s departure. Atkins, nominated by President-elect Donald Trump, is widely viewed as more receptive to digital assets and decentralized finance innovations.
Balchunas speculated that applicants would likely refile for Solana ETFs under the new administration, potentially benefiting from a regulatory environment more favorable to cryptocurrencies. Historical precedents, such as the simultaneous approval of multiple Bitcoin ETFs, bolster optimism for a more inclusive approach under Atkins.
Nate Geraci, President of the ETF Store, echoed these sentiments, calling the current leadership a “lame-duck administration” and anticipating no significant ETF approvals until the transition occurs. Industry leaders believe the shift in SEC leadership could mark a turning point for crypto ETF approvals, including those tied to Solana.
Solana Price Movement and Market Sentiment
While the rejection dampened short-term enthusiasm for Solana ETFs, the market for Solana’s native token (SOL) remains resilient. SOL has consolidated in a narrow price range near $240, with resistance levels around $300. Analysts suggest that the broader cryptocurrency market’s recovery could propel SOL beyond its current levels, though the absence of ETF approval may temper its rally.
Despite regulatory setbacks, institutional interest in Solana continues to grow, supported by its robust blockchain ecosystem and scalability. Traders and investors are closely watching the token’s performance, anticipating a breakout once regulatory clarity improves.
Also Read: SEC Blocks Solana ETF Filings! $300 SOL Price Rally Hangs in the Balance
The SEC’s rejection of Solana spot ETFs underscores the regulatory hurdles facing the cryptocurrency industry under Gensler’s leadership. However, with Paul Atkins poised to take the helm, market participants remain optimistic about a potential paradigm shift in 2024. Until then, Solana and its stakeholders face a “waiting game,” balancing regulatory challenges with persistent market enthusiasm.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
