The U.S. Securities and Exchange Commission (SEC) has hit another roadblock in the cryptocurrency ETF approval process, this time targeting Solana-based exchange-traded funds (ETFs).
Following discussions with potential issuers, the SEC has raised concerns about whether Solana (SOL) should be classified as a security. This classification has historically proved a significant hurdle for cryptocurrencies seeking ETF approval.
In response to the uncertainty, Cboe BZX, a major exchange, has withdrawn its filings to initiate the approval process for Solana ETFs, effectively pausing any immediate prospects. This decision underscores the challenges faced by cryptocurrencies in securing regulatory green lights under the current administration.
While Ethereum and Bitcoin ETFs have recently gained approval, Solana’s path remains fraught with obstacles. Industry experts like Nate Geraci and James Seyffart had anticipated this delay, citing the SEC’s inclination to view Solana as a security. They believe the earliest opportunity for a Solana ETF could be in 2025 or later.
The withdrawal of the 19b-4 filings, crucial for the SEC’s review, has effectively frozen the approval process. These filings, which typically appear on the Cboe website and Federal Register, are no longer accessible.
Despite the setback, some issuers, including VanEck, which submitted a Solana ETF application in July, may attempt to resubmit their proposals. However, they will face the challenge of establishing a Commodity Futures Trading Commission (CFTC)-regulated market for Solana, a prerequisite for ETF approval.
VanEck argues that Solana shares characteristics with Bitcoin and Ethereum, which are not considered securities, positioning it as a commodity. However, experts maintain that gaining approval for a Solana ETF will be a long and arduous process, requiring a shift in the regulatory landscape.
Related: Solana Investors On Edge As VanEck Battles For ETF Approval
The SEC’s decision to pause Solana ETF approvals highlights the ongoing tension between the crypto industry and regulators as they grapple with the evolving nature of digital assets.
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.
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