Solana (SOL) Solidifies Its Place in the Crypto Market Amid ETF Conversations
Solana (SOL) has consistently challenged Ethereum, initially on scalability and transaction fees, and now finds itself at the center of discussions around Exchange-Traded Funds (ETFs).
The Case for Solana ETFs Gains Traction, Says VanEck’s Sigel
Matthew Sigel, Head of Digital Assets Research at VanEck, advocates for the introduction of Solana-based ETFs, drawing on the European market’s experience, which already supports multiple exchange-traded products (ETPs), including both single coin and basket options. Sigel noted, “We are eager to spearhead this innovation in the U.S. as well.”
During an appearance on The Wolf of All Streets Podcast, Sigel acknowledged the current regulatory challenges, largely under the purview of Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC). However, Sigel remains optimistic that regulatory conditions could improve, potentially broadening the crypto ETF landscape.
In a recent report by BeInCrypto, Sigel outlined the steps required for the approval of a Solana-based ETF, drawing parallels between Solana and Ethereum. His belief that an Ethereum ETF could pave the way for a SOL counterpart remains steadfast.
Sigel also reiterated VanEck’s commitment to both crypto and ETFs, referencing a statement by the firm’s CEO, Jan Van Eck, at the Bitcoin 2024 Conference, where he revealed that 30% of his personal assets are invested in Bitcoin.
As regulatory prospects brighten, it’s worth noting former President Donald Trump’s comments during the Bitcoin 2024 Conference in Nashville, where he vowed to replace Gensler if re-elected. This move is seen as an appeal to the crypto community, with potential regulatory shifts on the horizon under new SEC leadership.
Nate Geraci, President of The ETF Store, aligns with Sigel in hoping for more favorable regulations. Meanwhile, crypto analyst Miles Deutscher takes a more cautious approach, suggesting that while a Solana ETF might be premature, the rapid evolution of the crypto space leaves room for surprises.
BlackRock’s Cautious Stance on Solana ETFs
Despite the growing optimism, BlackRock remains skeptical. Robert Mitchnick, Head of Digital Assets at BlackRock, pointed out the significant differences in market cap and maturity between major cryptocurrencies and smaller assets like SOL. Based on these factors, BlackRock has no immediate plans to launch a Solana ETF.
“I don’t think we’ll see a flood of crypto ETFs. Bitcoin currently represents about 55% of the market cap, with Ethereum at 18%. The next viable asset is around 3%. It just doesn’t meet the necessary threshold in terms of maturity, liquidity, and other factors,” Mitchnick explained.
BeInCrypto also reported that BlackRock is focusing on Bitcoin and Ethereum ETFs rather than considering SOL. While BlackRock has some exposure to crypto, including futures and ETFs, Mitchnick dismissed the likelihood of a Solana ETF in the near term, citing concerns over its investability.
“Not in the immediate future. We assess the investability criteria to determine what can be included in an ETF. Currently, Bitcoin and Ethereum meet those criteria based on both investability and client demand. It might be a while before we see anything like a Solana ETF,” he said in a Bloomberg interview.
Meanwhile, SEC Commissioner Hester Peirce has expressed the need for further persuasion before the SEC would consider approving a Solana ETF. In a recent interview, she emphasized that there are still unresolved questions about what constitutes a security under SEC guidelines.
While the conversation around Solana ETFs continues, large investors are positioning themselves to benefit from potential developments. So far, only VanEck and 21Shares have filed to list such financial instruments, with the Chicago Board Options Exchange (CBOE) also strengthening the odds by submitting form 19b-4s for Solana ETFs and opening the floor for public commentary.
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