SEC Faces Deadline on Grayscale's Solana ETF Conversion; Litecoin ETF Remains a Contender
SEC Decision Looms for Grayscale's Solana ETF
The Securities and Exchange Commission (SEC) is facing a critical deadline regarding Grayscale's application to transform its Solana Trust (GSOL) into an exchange-traded fund (ETF). This decision, due January 25th, will significantly impact the crypto market and the future of Solana-based investments.
Key Developments:
- January 25th Deadline: The SEC must decide on Grayscale's GSOL conversion proposal.
- Multiple Solana ETF Proposals Pending: VanEck, 21Shares, Canary Capital, and Bitwise also await SEC rulings on their Solana ETF applications.
Grayscale's GSOL, launched in April 2023, held 7,221,835 outstanding shares as of January 21st. NYSE Arca proposed listing GSOL shares as a spot Solana ETP on December 4th.
The SEC's decision comes after the departure of former Chair Gary Gensler. Under Gensler's leadership, the SEC's enforcement division filed several lawsuits against crypto firms, classifying Solana and other digital assets as securities. This stance, according to Bloomberg ETF analyst James Seyffart, presents challenges for other SEC divisions considering Solana for commodity ETF status. Seyffart suggests that due to this the timeline could extend into 2026.
“The SEC’s Division of Enforcement is calling Solana a security, which prevents other SEC divisions from analyzing it for a commodities ETF wrapper.”
The appointment of crypto advocate Paul Atkins as SEC Chair could potentially influence future ETF decisions, but his confirmation process is expected to take months. Until then, the SEC operates with three commissioners: Acting Chair Mark Uyeda, Hester Peirce, and Caroline Crenshaw. Even with a potential leadership shift, Sol Strategies CEO Leah Wald believes an immediate approval for a SOL ETF is unlikely, predicting it could take a year or more for regulators to fully grasp Solana's characteristics.
“I think there’s quite a while until a SOL ETF gets approved…it could take a year or more for regulators to understand Solana’s unique attributes.”
VanEck and 21Shares filed 19b-4 forms with the SEC for their Solana ETFs last July. Canary Capital and Bitwise followed suit later in the year. VanEck's Head of Digital Assets Research, Matthew Sigel, argues that Solana functions similarly to other digital commodities like Bitcoin and Ethereum.
While Solana and XRP are frontrunners for the next wave of spot crypto ETFs, ongoing legal challenges suggest a Litecoin ETF might be the first to launch under the current administration. The Commodity Futures Trading Commission (CFTC) considers Litecoin a commodity in its case against KuCoin.
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