VanEck Solana ETF Filing: Why is Solana Considered a Strong Candidate for an ETF?

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VanEck Solana ETF Filing: Why is Solana Considered a Strong Candidate for an ETF?

More ETF news is coming out. After the Bitcoin and Ethereum ETF, a filing of one of crypto friendliest ETF providers, VanEck, has been submitted. What does this mean and how realistic is its approval? And most importantly, what does it mean for the SOL price?

What is Solana’s Background?

Solana was founded in 2018 by Anatoly Yakovenko and Raj Gokal, and was launched in 2020 as a delegated proof-of-stake blockchain. It is designed for high performance and mass adoption, and has ultra-cheap transaction costs and many decentralized applications.

Often called the payable blockchain for anyone who does not have enough money to cover the high gas fees of the Ethereum mainnet. It was endorsed by fallen crypto exchange FTX but rose from the ashes and became the go-to blockchain during the memecoin frenzy of previous months. More info can be found in our coinreport.

Is a Solana ETF Possible? 

Currently, the path to launching a spot digital asset ETF in the US is quite structured and primarily open only to assets with a federally-regulated futures market. While Bitcoin and Ethereum meet these criteria, Solana does not yet.

However, recent political shifts and regulatory changes could mean that the landscape may be open to a potential approval of the ETF. And that’s why ETF provider VanEck was one of the first to file a request for an Solana ETF.

VanEck believes that offering investors exposure to this versatile and innovative open-source ecosystem will tap into the growing demand for alternative investment opportunities in the digital space.

Comparison with Other Digital Commodities

Similar to other digital commodities like Bitcoin and Ether, the native token SOL is used to pay for transaction fees and computational services on the Solana blockchain. SOL’s utility extends across a broad range of applications and services within the Solana ecosystem.

Decentralization and Utility

The Solana network operates on a decentralized basis, maintained by a diverse and globally distributed group of independent validators. These validators play a crucial role in processing transactions and securing the network, ensuring that no single entity can control the system.

How Could a Spot Solana ETF Impact SOL’s Price?

The approval of a spot Bitcoin ETF led to substantial price increases for Bitcoin, and a similar outcome might be expected for Solana. Although the initial inflows into a Solana ETF might be smaller than those for Bitcoin, even conservative estimates suggest significant potential price increases for SOL.

On the other hand, these filings and positioning of big providers as the most crypto friendly ones, could be one of the top signals of this ‘pico’ top. Interesting to follow nevertheless. If you are interested in longing or shorting Solana, you can check out our most trusted exchanges here.

Controversy and Criticism

Some commentators have also pointed out concerns regarding the distribution model of SOL, noting that a significant portion was held in private hands from the outset. This aspect, coupled with the immediate launch with Proof of Stake (PoS), has led to doubts about the classification of SOL as a commodity and the overall legitimacy of the ETF proposal.

When is the Solana ETF going to be approved?

Critics argue that rushing to file for a Solana ETF before the Ethereum ETF has begun trading might undermine the momentum and potentially delay approval processes, with some predicting that approval might not come until mid-2025 at the earliest. If we compare it to the ages a Bitcoin ETF was approved. Others say the BTC and ETH ETF’s paved the way for more ETFs being approved quicker.

Conclusion

The potential approval of a Solana ETF could have significant impacts on the cryptocurrency market. If approved, a spot Solana ETF would likely attract investor inflows and drive up SOL prices. However, that to file before the Ethereum ETF trading begins could undermine momentum. 

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