Solana ETF Impeded as SEC Questions SOL’s Security Status

Solana (SOL) remains under the “security” label imposed by the U.S. SEC, which likely led to the removal of VanEck and 21Shares’ 19b-4 forms from the Chicago Board Options Exchange (Cboe) website. 

In June 2023, the regulator classified 12 tokens, including SOL, as securities. Some of the projects resisted the SEC’s claims.  

SEC Questions SOL Token’s Security Status

A source close to the matter told a news site that the US SEC approached prospective issuers and expressed concerns over SOL’s potential security classification. This led to the SEC and the Cboe not filing the 19b-4s forms to the Federal Register.

The submission of the 19b-4 filings would have initiated the approval process. Notably, these forms are critical, outlining the requirements and disclosures necessary for listing an ETF for trading on a stock exchange. The 19b-4s qualifies the S-1 registration statements to go effective.

Indeed, BeInCrypto reported that the 19b-4 forms for Solana ETF filings disappeared from the Cboe website. As it stands, VanEck’s S-1 registration statement for its Solana ETF still appears on the SEC’s filing system, EDGAR. However, 21Shares’ S-1 registration statement filing is no longer present in search results, but the direct link remains functional.

Read more: Solana ETF Explained: What It Is and How It Works

This development shows the SEC’s ongoing caution, given its previous stance that Solana might be a security. Peer cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) have approved ETFs (exchange-traded funds). However, the likelihood of Solana ETFs being approved under the current administration remains low. Some experts say it might not happen until 2025, if at all.

“Solana ETF not happening anytime soon under the current administration,” President of the ETF Store, Nate Geraci, said.

Noteworthy, the US SEC is yet to publish its notice formally.

US to Lag Behind in Solana ETF as SEC Needs More Convincing

The recent events align with statements from Hester Pierce, alias ‘crypto mom,’ one of the SEC Commissioners. Pierce said the regulator would need more convincing before approving a Solana ETF. She cited what the SEC thinks is a security and what is not. 

The stance traces back to June 2023, when the US SEC branded 12 tokens as securities in the exchanges’ lawsuits. These were Solana’s SOL, Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), Coti (COTI), and Binance’s BUSD and BNB tokens.

“I mean, the SEC literally alleged SOL to be a security back in June 2023 when it sued Coinbase so this should not be a surprise,” attorney Fred Rispoli commented.

Per the regulator, these tokens have been “offered and sold as investment contracts and, therefore, as securities” since inception. The assertion that crypto assets are offered as an “investment contract” appears across the filing for each crypto asset mentioned, making it the de facto argument for what qualifies as securities.

Read more: What Is Solana (SOL)?

The regulator’s filing gave 53 pages worth of context, dissecting each of the 12 crypto assets mentioned. The latest stance against Solana marks another one of the SEC’s moves, which have been termed regulation by enforcement. Amidst this setback, crypto enthusiasts already see the US lagging in Solana ETF issuance.

“Canada will win again with a SOL ETF,” said David Tawil, co-founder and president of ProChain Capital.