SEC makes progress on Solana ETFs: Sources

The SEC has asked prospective Solana ETF issuers to submit amended S-1 forms within the next week, three sources with knowledge of the matter told Blockworks. 

The agency told issuers it would make comments on the S-1s within 30 days of their submission, two sources added.

“We have received comments from the SEC and have been asked to address and file an amended S-1, which we plan to do so shortly,” a 21Shares spokesperson told Blockworks. 

The SEC asked issuers to update language surrounding in-kind redemptions and how issuers would approach staking, two of the sources said, adding that the agency appears open to including staking as part of Solana ETFs.

One source estimated these updates could put Solana ETFs on track to be approved within three to five weeks. Bloomberg Intelligence’s James Seyffart told Blockworks that he’s eyeing approval this year, possibly as soon as July. 

“We think the SEC may now focus on handling 19b-4 filings for Solana and staking ETFs earlier than planned. Issuers and industry participants likely have been working alongside the SEC and its crypto task force to hash out rules, but the final deadlines for the agency's decisions on such applications aren't until October,” Seyffart wrote in a note this week.

Crypto exchange-traded products are regulated funds that give investors exposure to the spot price of underlying crypto tokens. Numerous issuers are vying for Solana ETFs, including Fidelity, Franklin Templeton, VanEck, Bitwise, Canary Capital, 21Shares and Grayscale.

The SEC, VanEck, Fidelity, and Bitwise declined to comment. Canary Capital, Grayscale, and Franklin Templeton didn’t immediately return requests for comment.

Grayscale, in a similar move to its bitcoin and ethereum ETFs, is looking to convert its SOL Trust into a spot ETF.  

Last month, the SEC delayed a decision on Grayscale’s Solana ETF, saying it hadn’t “reached any conclusions” on the 19b-4 filing to list the proposed spot ETF. 

The regulator officially recognized Grayscale’s filing in February. That month, Bloomberg analyst James Seyffart acknowledged the move as “significant” because the SEC had previously “refused” to acknowledge such filings. 

“We are under the assumption that most, if not all [filings for crypto ETFs] will be approved this year, some possibly earlier than others,” he said at the time.

Seyffart noted that both the filings for Solana and XRP ETFs have derivatives-based ETFs already, which paves the way for spot approval. 

“So I would just be absolutely and utterly stunned if the SEC does something to not allow a spot XRP or spot Solana ETF to launch,” he added. 

In April, Bloomberg Intelligence analyst Eric Balchunas said that they were boosting the chance of a SOL ETF to 90% from 70%. 

Forward Guidance’s Ben Strack previously reported that the 240-day deadlines for the products are in October, meaning that the SEC must make a decision on them. However, two of Blockworks’ sources expressed optimism that the agency’s approval for the ETFs could come sooner.

In a move widely seen as positive for potential SOL ETFs, CME launched SOL futures in February. It previously launched futures markets for both BTC and ETH prior to the ETF launches, a move that helped the SEC approve the products.  

As a result, numerous SOL futures ETFs have launched — including two from Volatility Shares.

— Jack Kubinec and Katherine Ross 

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