Analyst Predicts Solana ETF Approval Could Hinge on Presidential and SEC Changes
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On June 27, Bloomberg ETF analyst Eric Balchunas shared his insights on the recent application by VanEck for a Solana exchange-traded fund (ETF). Balchunas projected that the approval of the Solana ETF is likely if there is a change in the US presidency and the leadership of the US Securities and Exchange Commission (SEC).
Solana ETF Approval Hinges on Pro-Crypto Leadership
Eric Balchunas explained that the recently filed Solana ETFs might not be approved until after the upcoming election in November, which could potentially see pro-crypto candidate Donald Trump become the new president.
The knee jerk reaction here is 'oh this will never be approved bc there aren't Solana futures' agree but.. if change at POTUS i think anything poss. Just imagine Hester Peirce (or someone like that) running the SEC..
— Eric Balchunas (@EricBalchunas) June 27, 2024
He noted that a new administration in the US could lead to a change in leadership at the US SEC, suggesting a potential re-entry for Hester Peirce to lead the US regulator’s new charge and structure.
Hester Peirce, appointed by President Donald J. Trump to the US SEC and sworn in on January 11, 2018, is noted for providing temporary clarity to the crypto sector during her tenure. If Trump wins the election, Balchunas suggests that Peirce’s leadership as the SEC’s chair could positively impact the approval of a spot Solana ETF.
Variant Fund’s chief legal officer, Jake Chervinsky, supported this view, highlighting that Peirce’s interpretation of the Securities Exchange Act would likely favor spot Solana ETF applicants.
Eric is right.
There's nothing preventing the SEC from approving a spot crypto ETF without a futures market afaik.
It's just how the agency has interpreted the Exchange Act, but that could change under new leadership.@HesterPeirce has a different view: https://t.co/hgLpcTeeEZ https://t.co/AhS9EPfSts
— Jake Chervinsky (@jchervinsky) June 27, 2024
The analysts’ comments emphasize the need for a potential change in administration, summarizing recent actions and policies of the Biden administration and the SEC under Chair Gary Gensler against the crypto industry.
Notably, Solana (SOL) was one of the 67 cryptocurrencies the US SEC labeled as securities when the regulator sued Binance and Coinbase in June 2023, affecting over $100 billion worth of tokens on the market.
The SEC now labels 67 crypto’s as securities, affecting over $100 billion worth of tokens on the market.
Here's the Full list👇
Naga $NGC
Monolith $TKN
IHT Real Estate $IHT
Power Ledger $POWR
Kromatica $KROM
DFX Finance $DFX
Amp $AMP
Rally $RLY
Rari Governance Token $RGT…— KoinX (@getkoinx) June 8, 2023
At press time, there is no clarity on whether the status of Solana has changed, thus adding a level of complexity in the crypto space.
The news of the Solana ETF application pushed SOL’s price by around 10%, indicating a potential upward trajectory for the token if the SEC greenlights its ETF application.
Impact of “Futures” on Solana ETF Approval Raises Concerns
Meanwhile, Eric Balchunas noted the lack of Solana Futures in the crypto market is an important factor that could lead to the disapproval of spot Solana ETF under the current regulatory approach.
The analyst concern revolves around the fact that the US SEC has historically approved spot ETFs only after the establishment of futures products for the same asset. This was evident in the SEC’s approval of spot Ethereum ETFs and spot Bitcoin ETFs.
The SEC’s rationale is that futures markets are regulated and can provide a more controlled environment to assess the asset’s market behavior, thus mitigating risks like fraud and market manipulation.
In the case of Solana (SOL), the absence of a futures product means there isn’t an established, regulated market for the SEC to observe.
Should Solana get an ETF at some point? Absolutely.
But this is also reckless by VanEck, when futures volume, unsettled SEC claims, etc are outstanding with Solana.
Really hope this isn’t giving Gensler an easy setup. https://t.co/93TkQLAl66
— Adam Cochran (adamscochran.eth) (@adamscochran) June 27, 2024
This lack of a regulatory framework for futures trading on Solana makes the SEC hesitant to approve a spot ETF, as they fear potential issues in the spot market could go unchecked.