VanEck, a prominent investment management firm, has recently submitted an application for the first Solana Spot Exchange Traded Fund (ETF) in the United States, signaling a significant step towards integrating Solana more deeply into the investment landscape.
This move aims to leverage Solana’s user-friendly advantages over competitors like Ethereum. If approved, the proposed ETF, the VanEck Solana Trust, will be listed on the Cboe BZX Exchange.
VanEck Solana trust overview
The VanEck Solana Trust is designed to closely track the value of Solana (SOL) minus the Trust’s operational expenses. The Trust will utilize the MarketVectorTM Solana Benchmark Rate to ensure accurate tracking, which aggregates price data from leading SOL trading platforms. This rate is maintained by MarketVector Indexes GmbH, an affiliate of VanEck Digital Assets, LLC, which serves as the Trust’s sponsor.
The Trust’s operations include vital partners such as the Delaware Trust Company, serving as the Trustee, and a designated SOL Custodian responsible for holding the Trust’s Solana assets. However, the Trust will abstain from staking, meaning it will not participate in mining or transaction validation processes that could yield additional SOL.
Share issuance and redemption
VanEck’s Solana Trust plans to continually offer Shares, having registered an indefinite number with the Securities and Exchange Commission (SEC). Transactions involving these Shares will occur in blocks called “Baskets,” which are valued based on the net asset value (NAV) of the Shares they contain, accounting for Sponsor fees and other costs.
The Trust has established a purely cash-based mechanism for share redemption. “In cases of cash redemption, the Sponsor will coordinate the sale of SOL corresponding to the Basket’s value to a pre-selected Liquidity Provider, with the proceeds then distributed from the Trust’s cash account held by the Cash Custodian to the Authorized Participant,” the firm stated. This method ensures that both subscriptions and redemptions are handled exclusively in cash, facilitating smoother transactions for Authorized Participants
Regulatory insights and market forecast
The Trust’s shares are registered under the Securities Act of 1933. However, the Trust itself does not fall under the regulatory scope of the Investment Company Act 1940, nor is it considered a commodity pool as defined by the Commodity Exchange Act. Consequently, the Trust’s Sponsor is not subject to oversight by the Commodity Futures Trading Commission (CFTC).
This application comes as VanEck has previously launched a Bitcoin spot ETF and is seeking approval for an Ethereum spot ETF. Despite these developments, the Solana ETF faces unique challenges, notably the absence of a futures ETF and previous classifications by the SEC that deemed SOL security. This factor influenced platforms like Robinhood to delist SOL.
James Seyffart, an ETF analyst from Bloomberg, suggests that the outcome of this Solana ETF application might pave the way for further similar applications, contingent upon shifts in leadership at the SEC and the White House. He posits that the earliest possible launch for the Solana ETF could be by 2025, assuming regulatory conditions evolve favorably.