Each fund would invest in SOL, which is currently the fifth largest cryptocurrency by market cap.

Two asset management firms, VanEck and 21Shares, have applied to offer Solana spot exchange-traded funds (ETFs).

VanEck filed its application with the U.S. Securities and Exchange Commission (SEC) on June 27, while 21Shares filed its application on June 28. Both funds intend to list and trade shares on the Cboe BZX Exchange.

The ETFs aim to invest in Solana’s native cryptocurrency token, SOL, and reflect the the asset’s price performance minus operating expenses.

Both applications identify certain companies that will participate in operations. 21Shares identifies Coinbase Custody as its crypto custodian and names Foreside Global Services as its marketing agent. VanEck’s application identifies a subsidiary, Van Eck Securities Corporation, as the marketing agent.

Each filing application leaves other details blank, including the cash custodian, administrator, and transfer agency plus sponsor’s fees and ticker labels.

VanEck Believes SOL Is Commodity

Matthew Sigel, VanEck’s head of digital asset research, has commented extensively on the firm’s decision to apply for the fund.

VanEck and Sigel believe Solana’s SOL token is a commodity because it functions in a way that is similar to other recognized digital commodities such as Bitcoin (BTC) and Ethereum (ETH). Each can be used to pay for transaction fees and on-chain services, sent in peer transactions, traded on exchange platforms, and more.

Sigel added that Solana’s decentralization, utility, and feasible economics “align with the characteristics of other established digital commodities.”

He also praised Solana broadly by asserting that it has unique qualities and advantages over its competitor, Ethereum. Sigel said Solana’s “scalability, speed, and low costs may offer a better user experience for many use cases.”

SOL’s supposed commodity status could make the token a promising candidate for a spot ETF. Importantly, the SEC referred to both spot Bitcoin ETFs and spot Ethereum ETFs as commodity-based trust shares in its earlier approval orders.

However, the SEC has not ruled on whether SOL is a security or commodity; its chair, Gary Gensler, holds that most cryptocurrencies are securities.

Lack of Futures is an Obstacle

There is another consideration: unlike Bitcoin and Ethereum, SOL does not have a CME futures market, which could impact its odds of approval.

Before the SEC approved spot Bitcoin and Ethereum ETFs, it approved futures ETFs for each asset. Applicants cited market correlations between spot and futures markets for each asset to support their spot ETF applications.

Some experts believe the difference could block a spot Solana ETF. Bloomberg ETF analyst Eric Balchunas expressed a “knee jerk reaction” that a SOL ETF will not be approved due to the lack of SOL CME futures. Variant CLO Jake Chervinsky agreed that the SEC will cite the lack of a futures market to justify its denial.

Both experts nevertheless agreed odds could shift if U.S. elections cause a change in presidency, and, in turn, agency leadership. Chervinsky said:

“There’s nothing preventing the SEC from approving a spot crypto ETF without a futures market … It’s just how the agency has interpreted the Exchange Act, but that could change under new leadership.”

VanEck is more confident in an approval. Sigel told the the Financial Post that VanEck could support its application in the absence of CME futures by focusing on market surveillance-sharing agreements with centralized exchanges.

Aside from the issue of futures markets, some have have highlighted potentially slow adoption. Wintermute CEO Evgeny Gaevoy told EconoTimes that upcoming spot Ethereum ETFs could experience “minimal inflows” on launch. Any potential spot Solana ETFs could see even lower flows, per the report.

Other ETFs Exist

The U.S. Securities and Exchange Commission has approved certain other types of spot crypto ETFs. It approved spot Bitcoin ETFs in January. All of those funds are are now available through brokerages and exchanges.

The SEC also approved rule changes allowing exchanges to list and trade spot Ethereum ETFs in May. Bloomberg expects the SEC to allow issuers to launch ETF in early July, but the agency itself has not announced any date for a launch.

The SEC separately approved Bitcoin futures ETFs in 2021 and Ethereum futures ETFs in 2023. Both types of funds are now trading.

VanEck and 21Shares offer several products in the above categories. VanEck offers the VanEck Bitcoin Trust (HODL) and is preparing to launch its VanEck Ethereum Trust (ETHV). 21Shares offers the ARK 21Shares Bitcoin ETF (ARKB) in partnership with Ark Invest and is preparing to independently launch its 21Shares Core Ethereum ETF (CETH) fund. Each company offers non-spot crypto products as well.

Numerous other firms, most notably the major asset managers BlackRock and Fidelity, also offer spot Bitcoin ETFs and other products. At least 24 crypto ETFs exist in total, according to a list from Coinglass.