Solana’s Road to ETF Approval: Key Factors

Solana (SOL) is currently one of the leading candidates for approval of a cryptocurrency exchange-traded fund (ETF) due to its strong market presence and popularity. As the fifth largest cryptocurrency with a market cap exceeding $66 billion, Solana has gained a reputation as an “Ethereum killer.” However, there are several hurdles that need to be overcome for ETF approval.

One major challenge for Solana is the absence of a regulated futures contract market. Unlike Bitcoin and Ethereum, which have futures products listed on major US exchanges, Solana has not yet achieved this milestone. Rumors suggest that the Chicago Mercantile Exchange (CME) declined to list a Solana futures fund, making it a substantial barrier to overcome, according to Bloomberg ETF analyst James Seyffart.

Another significant hurdle is obtaining approval from the Commodity Futures Trading Commission (CFTC), the regulatory body that oversees futures markets. Additionally, Solana has been classified as a security by the US Securities and Exchange Commission (SEC) in its lawsuits against Coinbase and Kraken. This classification poses a major obstacle to obtaining ETF approval, as neither Bitcoin nor Ethereum are designated as securities by the SEC.

Industry experts remain skeptical about the likelihood of Solana and other cryptocurrency ETFs. Nikolaos Panigirtzoglou, the managing director and global market strategist at JPMorgan, doubts the approval of Solana ETFs due to the SEC’s unclear stance on the status of various crypto assets.

Betting on Polymarket predicts only a 6% chance that the SEC will approve a Solana ETF by the end of 2024, and no major US firms have pursued Solana ETF approval formally. Currently, Solana-based financial products in the US include the GrayScale Solana Trust and 21Shares’ Solana Staking ETP (ASOL), which are listed on European stock exchanges.

While the approval of Bitcoin and Ethereum ETFs has generated speculation about a Solana-based ETF, significant regulatory challenges remain. Nonetheless, the Solana community remains hopeful for a favorable outcome in the near future.