Just half a year ago, the US Securities and Exchange Commission (SEC) rejected applications for Solana ETFs. However, with the agency’s radical change in direction under the Trump administration, the tide has turned. Several funds based on the cryptocurrency could receive approval as early as May.
Spot-based Bitcoin ETFs have been trading in the United States for a little over a year. With nearly USD 100 billion in assets under management, they can be considered a resounding success. The Ethereum ETFs, introduced a few months later, had a rather disappointing start. Solana, on the other hand, never even made it to the starting line. The SEC cited unresolved questions regarding the cryptocurrency’s security status as the reason. The agency’s new leadership, however, takes a different view-pointing to imminent approval of Solana ETFs. Issuer 21Shares confirmed this to CVJ.CH upon request.
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Solana ETFs in May
The point of contention between the former and current SEC leadership lies in the classification of digital assets. Under Gary Gensler, the SEC classified most cryptocurrencies as securities, subjecting them to stricter regulatory oversight. There were no clear guidelines for crypto projects on how to register as a security. Since Trump took office, cryptocurrencies have instead been classified as commodities-aligning with the approach of most other countries. This places the asset class under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
Accordingly, numerous applications for altcoin funds have been submitted to the SEC, with the highest expectations resting on ETFs for the cryptocurrency Solana. Among the contenders are some of the largest Bitcoin ETF issuers, including Fidelity, Grayscale, and 21Shares. In February, the SEC acknowledged these applications, triggering the official countdown to a decision. The final deadline for the Solana ETFs is set for October this year, but 21Shares anticipates an earlier green light.
"The SEC’s signals suggest that approval in May 2025 is likely."
– Duncan Moir, President of 21Shares
Impending top or flop?
Demand for Solana ETFs is difficult to gauge. On one hand, a look at European crypto ETPs suggests a potential rush on the products. At Swiss ETP issuer 21Shares, the assets under management (AuM) of its Solana product-USD 660 million-nearly match that of its Bitcoin ETP (USD 700 million). The Ethereum ETP, by contrast, accounts for less than half of that (USD 250 million). In addition to demand, the substantial price increase of the cryptocurrency over the past two years has contributed to the high AuM.
On the other hand, the underwhelming trading volume of the recently launched Solana futures on the Chicago Mercantile Exchange (CME) raises doubts. On the first day, the products at the world’s largest derivatives exchange posted a lackluster USD 12 million in trading volume. For comparison: Bitcoin futures hit USD 480 million and Ethereum USD 88 million on their respective launch days.
