SEC Signals It Would Eliminate Solana ETF Spot Films and Stop New Crypto ETF Licenses

Key Takeaways

The SEC plans to reject Solana ETF spot applications and suspend new crypto ETF licenses.
The SEC's decision will affect a number of fund managers trying to offer Solana-based investment products.

According to FOX Business reporter Eleanor Terrett, the SEC has told at least two prospective ETF issuers that it will reject their applications for the Solana ETF spot. Sources also indicate that the SEC is unlikely to approve any new crypto ETFs “under the current administration.”

🚨SCOOP: I have confirmed that the @SECGov has notified at least two of the five prospective applicants that they will reject their 19b4 filings for the $ sol spot ETFs.

The consensus here, I'm told, is that the SEC will not entertain any new #crypto ETFs under current administration.

— Eleanor Terrett (@EleanorTerrett) December 6, 2024

The announcement comes as a number of fund managers seek approval for investment products that will continue to SOL spot prices, the fifth largest crypto asset by market cap. Grayscale Investments is the latest company to join the Solana ETF race.

On Tuesday, Grayscale filed with the SEC to Solana Trust Versionwhich manages more than $134 million in assets, into a spot ETF under the ticker GSOL.

Many other fund managers, including VanEck, 21Shares, Bitwise, and Canary Capital, have also submitted bids for Solana ETFs.

The increase in applications shows a strong interest among fund managers in diversifying their investment products, aims to provide they have investors with more crypto ETF offerings beyond spot Bitcoin and Ethereum ETF.

In addition to Solana funds, XRP ETFs are also gaining traction. Several companies, including Bitwise, Canary Capital, and WisdomTree, are following the regulatory nod.

However, whether these ETFs will eventually enter the market will depend on the SEC's assessment of the underlying crypto assets, here SOL and XRP. In August, the SEC formally rejected the Cboe BZX applications for two Solana spot ETFs due to concerns about Solana's classification as a security.

The securities watchdog, under the leadership of SEC chairman Gary Gensler, has adopted a very restrictive approach to crypto assets. For ETF issuers who there were through the Ethereum ETF review process, Solana ETF spot rejection is not expected.

SOL, along with ADA and MATIC, were previously classified as securities as part of the SEC's lawsuit against Binance and Coinbase. However, a recent court filing in the Binance case indicated that the SEC wanted to hold off on deciding whether Solana was a security.

With Gensler ready to go next month, Trump's nominee for SEC chairman, Paul Atkinscould inspire new hope about the role of Solana ETF or XRP ETF once the position is confirmed by the Senate.