SEC Rejects Spot Solana ETF Applications

The U.S. Securities and Exchange Commission (SEC) has reportedly rejected applications for spot Solana exchange-traded funds (ETFs). According to sources, at least two out of five prospective issuers have been notified of the decision, aligning with the SEC’s cautious stance on cryptocurrency-related investment products.

SEC’s Regulatory Position on Solana ETFs

The SEC has consistently maintained a stringent approach toward approving cryptocurrency ETFs. Bloomberg ETF analyst Eric Balchunas noted that this rejection mirrors the broader regulatory trend under SEC Chair Gary Gensler, stating, “No surprise here. Crypto spot ETFs are on pause until new leadership steps in.”

Grayscale Investments, VanEck, 21Shares, Bitwise, and Canary Capital are among the firms affected by the decision. Grayscale had filed to convert its Solana Trust, which holds over $134 million in assets, into a spot ETF under the ticker GSOL. Despite their efforts, issuers have encountered regulatory headwinds, as the SEC hesitates to approve ETFs beyond Bitcoin and Ethereum.

Broader Implications for Crypto Markets

This latest rejection underscores a broader regulatory challenge for cryptocurrencies like Solana (SOL). The SEC has previously labeled Solana, along with Cardano (ADA) and Polygon (MATIC), as securities in lawsuits against Binance and Coinbase. While the SEC recently indicated in court filings that it may no longer pursue Solana’s classification as a security, the agency’s reluctance to approve spot ETFs persists.

Industry experts predict a shift in regulatory attitudes following the transition to new SEC leadership in January 2024. President-elect Donald Trump’s nominee for SEC Chair, Paul Atkins, is expected to adopt a more favorable stance toward cryptocurrency markets.

Nate Geraci, President of the ETF Store, shared similar sentiments, remarking, “We’re not expecting any approvals until the new administration is in place. Current leadership is in lame-duck mode.”

Market Reactions and Solana’s Price Movement

The SEC’s decision arrives as Solana’s native token, SOL, consolidates within a tight trading range. After a robust rally earlier in the year, SOL has stabilized near $240, with resistance around $300. While analysts remain optimistic about Solana’s long-term prospects, the lack of ETF approval could dampen short-term momentum.

Traders believe that a more accommodating regulatory environment could lead to a surge in ETF approvals, potentially boosting Solana and other cryptocurrencies. For now, asset managers remain in a waiting game, anticipating regulatory changes under the incoming SEC leadership.

This development reflects the evolving landscape of cryptocurrency regulations, highlighting the ongoing tug-of-war between market innovation and regulatory oversight.