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.

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.

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.

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.

Solana ETF
SOL price hit $150 price level after news of a Solana ETF application hit the market

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.

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.

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Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.