What Is Solana ETF and Will It Ever Be Approved?
Key takeaways:
- A Solana ETF is a fund that lets you invest in Solana (SOL) without actually buying the cryptocurrency.
- Spot Solana ETFs are approved in Brazil but not in the U.S. Experts do not expect them to be approved in 2024 or even in 2025.
- Alternatively, you can buy the Grayscale Solana Trust (GSOL), a closed-end fund, or the VanEck Solana, an exchange-traded note (ETN).
An ETF, or exchange-traded fund, is like a basket of different assets, such as stocks, bonds, or cryptocurrencies. You can buy shares in this basket on the stock market. This way, you can benefit from the price changes of the assets in the basket without having to own each one directly.
A Solana ETF works similarly but focuses on Solana, a fast and relatively cheap blockchain platform, and its token SOL. Solana technology is used to create financial apps, games, and digital art.
Investing in the ETF means that instead of buying Solana coins (SOL), you buy shares in the Solana ETF. This makes investing in Solana easier because you can do it through a regular brokerage account and don’t need to deal with digital wallets or understand how blockchain technology works. Keep in mind, though, that while the ETF tracks the price of Solana, there might be small differences in the price due to how the ETF operates.
When Will Solana ETF Be Approved?
As of September 2024, a spot Solana ETF has not been approved in the U.S. The approval of crypto ETFs is usually a significant event in the crypto market because these ETFs can attract more money into the sector. They make investing in specific cryptocurrencies easier for regular investors and large institutions. After the launch of the first Bitcoin exchange-traded fund (ETF) in January 2024, Bitcoin price surged 35% in just under two months.
After that, the crypto industry began discussing the possibility of Solana being next.
Meanwhile, Brazil’s Securities and Exchange Commission (CVM) gave the green light for the first-ever spot Solana ETF in August 2024. Later, the country also approved a second Solana spot ETF offered by the asset manager Hashdex.
However, approval in the U.S. may not happen soon. Investment manager VanEck filed for a Solana ETF to be listed on the Cboe BZX Exchange in June 2024. Crypto fund manager 21Shares also filed for a spot SOL ETF shortly after.
According to Eric Balchunas, a senior ETF analyst at Bloomberg, the chances of approval in 2024 or 2025 are “near zero.” He wrote on X:
“Yes, near-zero chance in 2024 and if Harris wins there’s prob near-zero chance in 2025 too. Only hope IMO is if Trump wins.”
The U.S. Securities and Exchange Commission (SEC) halted the approval process for Solana (SOL) spot exchange-traded funds (ETFs) in August 2024. There are several reasons for the delay. First, the approval process for spot Solana ETFs is more complex than for spot Bitcoin or Ether ETFs, which took years to gain SEC approval. While the SEC has agreed that Ether and Bitcoin are not securities (which would result in different treatment), it is still undecided about Solana. Solana has been mentioned in legal filings against major crypto exchanges like Binance and Coinbase as a potential security.
How to Buy Solana ETF
So far, you cannot invest in spot Solana ETFs, as they are not approved in the U.S., but there are several alternatives available.
VanEck Solana ETN
The VanEck Solana ETN is a type of debt security issued by a bank. It tracks the price of Solana (SOL) but does not represent ownership of the cryptocurrency. Instead, it works like a bond and can be bought and sold on the stock market. ETNs provide exposure to the performance of Solana, but they come with different risks compared to other investment products like ETFs
Grayscale Solana Trust (GSOL)
The Grayscale Solana Trust (GSOL) is a closed-end fund that allows investors to gain exposure to Solana (SOL). It issues a fixed number of shares through an initial public offering (IPO), which are then traded on the stock market. GSOL’s price can differ from the actual value of Solana due to market demand, meaning it might trade at a premium or discount compared to Solana’s true value.
Conclusion
A Solana ETF is an investment product that tracks the price of Solana, allowing you to invest in Solana without buying the actual cryptocurrency. Spot Solana ETFs have not yet been approved in the U.S. However, alternatives like VanEck’s Solana ETN and Grayscale’s Solana Trust offer ways to invest in Solana. These options have their own features and risks, so it’s important to understand them before investing.
FAQs
What is a Solana ETF?
A Solana ETF is a type of fund that follows the price of Solana (SOL) without requiring investors to own the cryptocurrency itself. It works like a basket of assets, allowing you to benefit from price changes in Solana through a regular brokerage account. This can make investing in Solana simpler for people who are unfamiliar with blockchain technology.
When will the Solana ETF be approved?
As of September 2024, spot Solana ETFs have not been approved in the U.S. This complex process can take years. Experts believe there is a very low chance of approval in 2024 or 2025.
What is the future of the spot Solana ETF?
Nobody knows for sure, but the chances of approval in 2024 or 2025 are currently very low. The approval process for such ETFs is complex, and there are ongoing discussions and hurdles related to regulations.
Can I buy a Solana ETF?
Not in the U.S. yet. However, you can invest in alternatives like the VanEck Solana ETN or Grayscale Solana Trust.
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