Investment firm 21Shares has filed with the United States Securities and Exchange Commission (SEC) to launch a spot Solana exchange-traded fund (ETF) titled “21Shares Core Solana ETF.” This is the second application the SEC has received for a spot SOL ETF, following VanEck’s filing on June 27.
21Shares Follows VanEck’s Lead
21Shares wasted no time applying for an ETF tied to Solana (SOL) one day after rival VanEck submitted a similar proposal.
We have another spot sol ETF filing…
This one from 21Shares.
Here we go again. pic.twitter.com/ujumjpdKbM
— Nate Geraci (@NateGeraci) June 28, 2024
If approved, the 21Shares Core Solana ETF will trade on the Cboe BZX Exchange. The ETF aims to reflect the performance of Solana’s native token, SOL, adjusted for the fund’s expenses and liabilities.
While only spot Bitcoin (BTC) ETFs have been given the nod so far in the U.S. and applications — from 21Shares and others — that seek to give investors exposure to Ethereum (ETH) without direct investment aren’t even completely greenlighted yet, Solana is a natural next step given it’s one of major crypto assets.
“21Shares is excited by the potential for an ETF in the US that provides access to the Solana ecosystem,” 21Shares Head of Legal Andrew Jacobson remarked in a statement. “We believe this is a necessary step for the crypto industry and it holds true to our mission to bring to market easily accessible financial products centered around crypto assets.”
The SOL held by 21Shares ETF will be custodied by Coinbase Custody Trust Company. The fund’s holdings will be held in separate wallets on the Solana blockchain. The fund will not offer exposure to staking yield generated by the network.
As per the firm’s S-1 application, redemptions for the investment product would be made in-kind — i.e., in SOL rather than cash — in line with other ETFs other than SOL.
Can The SOL Filling Find Approval Soon?
While Solana enthusiasts are undoubtedly excited about a potential SOL ETF in the U.S., some analysts are doubtful that the current administration will approve such an investment vehicle.
“Early thoughts are that this only has a shot to launch sometime in 2025 if we have a new admin in the White House and SEC. Even then not guaranteed,” Bloomberg ETF analyst James Seyffart opined.
Moreover, besides the SEC’s historical efforts to stonewall crypto-based ETFs because of concerns over potential market manipulation, the biggest legal hurdle standing in the way of a Solana ETF is that the securities watchdog has stated explicitly that SOL is an unregistered security. This happened last year when the Gary Gensler-helmed commission sued Coinbase and Binance crypto exchanges for offering U.S. customers SOL and a handful of other cryptocurrencies.
Additionally, Solana might fail to meet the SEC’s market surveillance requirements because there are no developed futures markets where the asset is traded.
The listing for the proposed 21Shares Core Solana ETF, nevertheless, marks an important milestone in the rising trend of institutional involvement in the crypto market. This ETF, following VanEck’s application, signifies growing confidence in Solana’s potential on Wall Street.
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