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News/VanEck and 21Shares Seeks Solana ETF in the US After Bitcoin and Ethereum Approvals

VanEck and 21Shares Seeks Solana ETF in the US After Bitcoin and Ethereum Approvals

Van Thanh Le

Jun 28 2024

3 weeks ago3 minutes read
Cubic robot surfing binary wave, projecting ETF documents in cosmic crypto sea

Solana ETF: A New Contender?

VanEck has boldly filed for the first Solana (SOL) ETF in the United States, intending to mirror Solana's price performance through shares backed by SOL tokens. This SEC filing, set for listing on the Cboe BZX Exchange, signifies a major development in digital assets. 

Matthew Sigel, VanEck's head of digital assets research, likens SOL to commodities like Bitcoin and Ethereum. Following the SEC's approval of spot Ether ETFs in May 2024, VanEck's move is a strategic play in the crypto investment arena.

Market analysts are closely watching this development. Bloomberg's James Seyffart predicts a possible launch in 2025, dependent on shifts within the SEC and White House. Despite the anticipation, skepticism persists about approval under the current administration due to concerns over market manipulation and SOL's security classification.

On June 28, 21Shares also made a significant move by filing an S-1 registration form for a Spot Solana ETF with the SEC. This ETF, if approved, will trade on the Cboe BZX Exchange and aims to track the performance of SOL. It will be backed by Coinbase Custody Trust Company as the custodian of SOL holdings. 

Solana's Market Dynamics and Future

GSR, a significant market maker, is bullish on Solana, highlighting its superior technology and potential ETF approval as key factors. Solana's proof-of-history mechanism and parallel transaction processing are noted technological advantages. GSR foresees Solana's value potentially increasing, with growth scenarios ranging from 1.4x to 8.9x depending on market conditions.

However, Solana faces significant challenges. A sharp decline in trading volume from $75-100 billion to $7 billion within 24 hours has raised concerns. Experts suggest this drop could be due to wash trading, with the revised volume still possibly 90% inflated, affecting Solana's credibility in the DeFi space. Additionally, such reports, linked to issues at Jump Crypto and a CFTC investigation, have further scrutiny.

Regulatory hurdles are significant. The SEC's classification of SOL as a security is a major obstacle, alongside the need for enhanced market surveillance. The upcoming elections may also influence the regulatory stance on crypto ETFs. 

Despite these challenges, the Solana Foundation is advancing, introducing new features like "Blinks" and "Actions" to enhance blockchain integration with social platforms, aiming to drive adoption and improve user experience. Solana Foundation’s initiatives aim to integrate blockchain transactions with social media to boost user engagement and adoption. Their focus on seamless user experiences reflects a commitment to growth in the DeFi space despite hurdles.

In terms of more developments, Light Protocol and Helius Labs introduced ZK Compression on Solana, a zero-knowledge proof technique reducing on-chain computation costs, igniting debates with Ethereum proponents over its similarities to Layer 2 solutions. The implementation lowers token airdropping costs from $260,000 to $50 per million users by compressing on-chain state while maintaining Solana's security and performance. 

Meanwhile, Solana's Colosseum raised $60 million for pre-seed investments in its Accelerator program, funding startup development and attracting 60,000 participants and $650 million in venture capital through hackathons since 2020. The latest hackathon involved 8,000 builders from 95 countries, submitting over 1,000 products.

Conclusion

With VanEck's strategic moves and GSR's market confidence, Solana stands at a crucial point. The interplay of regulatory developments, market dynamics, and technological advancements will shape its future in the digital asset ecosystem.

FAQs

What is the latest development regarding Solana ETFs?

VanEck has filed for the first Solana (SOL) ETF in the United States. The ETF aims to mirror Solana's price performance through shares backed by SOL tokens. This SEC filing is set for listing on the Cboe BZX Exchange.

When might the Solana ETF potentially launch?

Bloomberg analyst James Seyffart predicts a possible launch in 2025. The launch depends on shifts within the SEC and White House. Approval under the current administration faces skepticism due to concerns over market manipulation and SOL's security classification.

What are some of Solana's technological advantages?

Solana uses a proof-of-history mechanism and parallel transaction processing. These features are noted as key technological advantages by market makers like GSR. Solana's superior technology is cited as a factor in its potential growth.

This article has been refined and enhanced by ChatGPT.

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