3 Brand New Reasons Solana (SOL) Under $100 Could Be a Steal

On March 17, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission published a new set of guidelines classifying 16 major cryptocurrencies as "digital commodities," and Solana (CRYPTO: SOL) made the list. Now, with a firm foundation for legal clarity about its status as an asset, the coin's future looks significantly brighter than before.

But at roughly $90 per coin today, and down by about 36% during the past 12 months, Solana looks pretty beaten down, and its price hasn't fully reacted to the good news. Nonetheless, there are three specific things in the new guidance that directly strengthen the investment thesis for buying it, so let's look at why these specifics could make sub-$100 Solana into one of the more compelling opportunities in crypto at the moment.

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1. Its staking ecosystem can now expand freely

As you may know, staking is the process of locking up cryptocurrency so that it can be used to validate transactions on a proof-of-stake (PoS) blockchain in exchange for a yield. Solana's staking yield currently runs between 5% and 7% annually, making its return competitive with many types of traditional financial investments like bonds.

But until the new regulatory guidelines were issued, whether the yield constituted a securities offering -- thereby making it subject to regulations that blockchains weren't even trying to follow -- was an open legal question that chilled institutional participation.

The fresh guidance classifies four different types of staking as "administrative activity" rather than a securities transaction. For Solana, this is a huge opportunity to unlock.

The chain's liquid staking sector already holds more than $6.4 billion in total value locked (TVL), and that sum will now likely expand. Furthermore, exchange-traded funds (ETFs) holding Solana can now incorporate a staking yield directly. Cumulative Solana ETF inflows had already reached almost $1 billion before generating a yield was allowed, so now even more capital will be incentivized to enter the ETFs and boost the coin's price.

And all of that is a new reason to buy and hold the coin while it's cheaper than before.

2. Airdrops are now on firmer legal ground

Airdrops, meaning free token distributions to users who meet criteria like holding a coin or using a protocol, are one of the main engines new Solana projects use to attract users. Think of airdrops like special dividends for a project's users.

But airdrops occupied a regulatory gray zone, wherein they could have potentially been construed by regulators as distributing unregistered securities, so project teams faced serious liability.

The SEC now interprets airdrops of non-security crypto assets -- where recipients provide no money, goods, services, or other consideration -- to fall outside securities law. Project teams building on Solana can distribute tokens more freely without the specter of enforcement activity.

That will likely mean they can grow faster, building Solana's ecosystem and increasing demand for the coin along the way.

3. Another legal overhang preventing institutional adoption is gone

Perhaps the most consequential aspect of the guidance is the simplest: Solana is now officially a digital commodity, and is thus no longer threatened by the risk that it might be an unregistered security. That risk had made banks and asset managers reluctant to touch the chain.

Because the rules and reporting requirements that govern issuing and holding digital commodities are substantially fewer than the rules governing securities, the legal overhead for pretty much everyone who might be involved with the asset is now less burdensome.

Therefore, Solana is now a much more appealing place to park capital. For financial institutions looking to generate a yield, develop a payments system, interact with decentralized finance (DeFi) applications, or manage tokenized real-world assets (RWAs) like stocks or bonds -- not to mention a swath of other activities -- Solana is thus now an obvious choice due to its high speed and low transaction costs.

So the coin's prices of less than $100 is unlikely to last forever, which is another reason it might make sense to buy it right now.

Alex Carchidi has positions in Solana. The Motley Fool has positions in and recommends Solana. The Motley Fool has a disclosure policy.