The Chicago Board Options Exchange on Monday filed paperwork asking the Securities and Exchange Commission to list two new crypto offerings: the VanEck Solana Trust and the 21Shares Core Solana ETF. The move is an attempt to offer a third cryptocurrency—Solana—in the form of an ETF, following the SEC's approval of Bitcoin ETFs in January, and ahead of Ethereum ETFs, which are expected to debut in coming weeks.
“We are now addressing the increasing investor interest in Solana—the third most actively traded cryptocurrency after Bitcoin and Ether," Rob Marrocco, global head of ETP listings at Cboe Global Markets, said in a statement.
The listings will depend on the regulator's approval of the issuers' respective S-1 filings—the forms public companies are required to submit when launching a new security—both filed at the end of June.
Eric Balchunas, Bloomberg’s senior ETF analyst, has predicted that trading may begin July 18. So, with hedge funds managers, brokerages and financial advisors just days away from gaining access to a second cryptocurrencies via ETFs, issuers are wasting no time in looking ahead to what may be next.
Looks like Solana ETFs are going to have a final deadline of mid-March 2025. But between now and then the most imp date is in November. If Biden wins, these likely DOA. If Trump wins, anything poss. https://t.co/ywkf6oA8Rc
— Eric Balchunas (@EricBalchunas) July 8, 2024
But getting Solana ETFs over the line will be an entirely new type of battle, sources told Fortune.
“As is, the [Solana application] is very unlikely to get approved," a source close to the matter told Fortune who requested anonymity due to company policy. That’s because the current SEC administration has set a de facto precedent of requiring a regulated futures market for the underlying asset—and a correlation between that and the spot market—for an ETF approval. While Bitcoin and Ether have such markets—the CME Group launched Bitcoin futures in 2017, and for Ether in 2021— Solana and subsequent cryptocurrencies do not.
So, why spend millions of dollars in legal fees to launch ETF applications, with low approval odds? In short: the election.
Once the SEC confirms receipt of the CBOE application—which typically occurs within 15 days of filing—it has 240 days to make a decision, meaning the regulator has a deadline of mid-March. Based on historical behavior, the regulator is likely to leave a ruling to the final hour. So, that means if President Joe Biden loses the presidential election in November—an outcome that is currently most likely, according to polls—the decision will be in the hands of Donald Trump's administration. Trump has been increasingly bullish on crypto over recent months, touting himself as the "crypto president," Reuters reported.
This is "largely a bet” on Trump winning the election, James Seyffart, Bloomberg’s ETF research analyst, told Fortune. Echoing this sentiment: While mid-March may be the SEC’s official deadline, “between now and then the most important date is in November. If Biden wins, these are likely DOA [dead on arrival]. If Trump wins, anything is possible,” Bloomberg’s Balchunas posted on X.
But regardless of the election outcome, Matthew Sigel, head of digital assets research at VanEck, told Fortune he’s optimistic about an approval. That’s because the SEC’s hostility towards proof-of-stake coins has been “whittled away” by its approval of the Ether ETFs, he says.
But if Biden is re-elected, issuers will likely face the daunting task of challenging the SEC’s prerequisite of a futures market to show correlation. In lieu of this, VanEck is reportedly constructing a legal case for why this burden need not be required. “We're working on that now—it’s being formulated and brainstormed,” the unnamed sourced said. Thus, if Biden wins, it's not "dead in the water," which is one of the reasons why VanEck decided to file, they said.
In addition, regardless of a Republican administration, Sigel believes there is a changing atmosphere on Capitol Hill in favor of crypto, giving VanEck “further confidence” of the chances of a Solana approval.
“I doubt that Elizabeth Warren's control over the financial services sector will endure into 2025. I predict her “anti-crypto Army” will be routed, and a Solana ETF will trade,” says Sigel.
