Cboe Removes Solana ETF Filings, Casting Doubt on Launch Prospects

In Brief: Solana ETF forms have disappeared from the Chicago Board Options Exchange (Cboe) website. This has led to speculation about a possible delay in their launch. Only two companies, VanEck and 21Shares, filed applications for SOL ETFs. Many believe Solana could follow Bitcoin and Ethereum as the next big crypto financial instrument.

Solana ETF Prospects Diminish Following Cboe Move: Recent reports show that the Forms 19b-4 for VanEck and 21Shares Solana ETFs were taken down after their submissions on July 8. One user on X pointed out, “Documents SR-CboeBZX-2024-066 and SR-CboeBZX-2024-067 aren’t accessible anymore.”

Cboe Global Markets filed its request to list Solana ETFs soon after VanEck and 21Shares submitted their applications. They even invited public comments, which indicated strong support for Solana's entry into the ETF market. However, the applications have vanished from the Cboe website without any formal withdrawal notices from the applicants.

Nate Geraci, the President of the ETF Store, interpreted these developments as a sign that a Solana ETF won't happen under the current administration. Scott Johnson, a finance lawyer, remarked that SEC Chair Gary Gensler likely means that the SOL ETF is “dead on arrival” under his watch.

Johnson added, “Instead of going through the full 19b-4 process, I assume Gary notified CBOE that these SOL applications were improperly filed as Commodity-Based Trust Shares because he believes SOL isn’t a commodity.” This means the SEC doesn’t need to issue a formal written disapproval order.

The sentiment is notable since the SEC has yet to publish its own notice. The regulator also never issued Notices of Filing for these applications. In a similar case, the SEC initially considered denying Ethereum (ETH) ETF applications before making its decision on July 23. In that instance, the SEC had already started the 19b-4 process, which required them to issue a formal approval or disapproval. They ultimately chose to approve it, which was a positive outcome for the crypto space.

Johnson speculated, “Issuers wanting to file for a SOL ETF and get a fair 19b-4 hearing will likely need to wait for the exchange-related enforcement actions to be fully resolved first.”

SOL ETF Approval Remains Hopium: In a recent interview, SEC Commissioner Hester Pierce said the regulator needs more convincing before approving a Solana ETF. Solana must meet the SEC’s strict regulatory requirements. This includes compliance with financial regulations, anti-money laundering laws (AML), and know-your-customer (KYC) protocols. It also has to show strong market demand, liquidity, and secure custody solutions.

BeInCrypto reported that getting a Solana ETF approved won’t be easy. Besides regulatory concerns and fears of market manipulation, doubts about network reliability must also be addressed. Griffin Ardern, Head at BloFin Research & Options, mentioned, “Solana has faced several severe downtime incidents, and the entire blockchain network has rolled back transactions or been unavailable for more than 24 hours.”

He added, “SOL issuers may need to prove that the Solana network is mature and stable enough and that the likelihood of similar incidents is low enough for investors to accept.” This is crucial to better protect investors' rights and interests.

One factor that could work in Solana’s favor is its success in global markets like Switzerland, Canada, and Brazil. A positive outcome in these regions could strengthen Solana's case for ETF approval. If Solana can operate successfully in regulated environments worldwide, it could support its case for approval in the U.S.

Companies like Valkyrie Investments and Bitwise Asset Management have already shown interest in filing for a Solana ETF. However, BlackRock remains skeptical. Robert Mitchnick, the head of digital assets at BlackRock, raised concerns about investability, market cap, and differences in maturity. Samara Cohen, CIO of ETF and Index Investments at BlackRock, also dismissed the prospects of a Solana ETF.

Meanwhile, Mathew Sigel, head of research at VanEck, believes that the existence of an Ethereum ETF qualifies Solana for the same market. He argues that the same qualities that qualify ETH as a commodity should also apply to SOL.