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Solana ETF Approval Possible, But Still Too Early

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By Erika John - - 5 Mins Read
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Wintermute CEO Evgeny Gaevoy has stated there is “near zero chance” of a Solana ETF approval this year.

His comments come after VanEck filed for a spot in Solana ETF with the US Securities and Exchange Commission (SEC) on June 27.

This filing has led to speculation among market analysts that the SEC might approve a Solana ETF for trading. 

Bloomberg’s Senior ETF analyst, Eric Balchunas, suggested that a change in US presidential leadership could lead to Solana ETF approval under a pro-crypto SEC leader like Hester Peirce.

Jake Chervinsky, a leading crypto lawyer, echoed this sentiment, saying, “There’s no good reason in law or policy why SOL shouldn’t have an ETF just like BTC and ETH. Yet, I’d guess the SEC will point to the lack of a futures market to justify denial.”

Perspectives on Potential Regulatory Changes

Some experts believe a Trump presidency could result in regulatory changes favorable to spot crypto ETFs.

A report by crypto market maker GSR speculated that permissive regulations under such leadership could make SOL the next digital asset to receive approval from regulators.

However, Wintermute’s CEO, Evgeny Gaevoy, doesn't anticipate these lenient regulations to be implemented this year.

He argues that a Solana ETF isn't viable at the moment due to the lack of demand.

He also pointed out that even the approved Ethereum ETF is expected to encounter difficulties in attracting investments once it's listed.

In the statement, he said, "Once you see how little inflows there will be into ETH ETFs (this year), it will be clear how even less flows SOL ETFs would get even if it’s approved. And I’m saying this all while Wintermute is long for both SOL & ETH, so no fud, just being realistic here. Adoption takes time."

Community Sentiments and Market Implications

Despite Gaevoy's doubts, some members of the crypto community believe that the approval date for a Solana ETF could come sooner than expected.

They argue that the chances of ETH ETF approval were only 12% until a week before the SEC gave the green light.

A crypto researcher known as Kwaker Oats pointed out that the approval of a SOL ETF wasn't anticipated this year, but the applications from asset managers indicate growing demand, which is a positive sign.

Proponents of a Solana ETF also challenge the notion of insufficient demand, pointing to the Grayscale Solana Trust (GSOL), currently trading at a premium of around $403 compared to SOL, priced at $145, as evidence of strong demand.

In a best-case scenario, GSR predicted that a spot Solana ETF could increase SOL's price, potentially by as much as 8.9 times its current value.

Even in the worst case, the cost could double if the spot ETF is approved.

The report noted that SOL's performance could surpass these estimates due to its use in staking and decentralized applications, which offer additional growth potential compared to Bitcoin. 

This is what the report read, “Moreover, there are reasons to believe the impact could be higher than these estimates, since, unlike BTC, SOL is actively used for staking and within decentralized applications and as the relationship between relative flows and relative size may not be linear.”