Asset manager 21Shares has submitted an application for a spot Solana exchange-traded fund (ETF), making it the second major firm to do so this week.

The proposed 21Shares Core Solana ETF aims to track Solana's (SOL) performance by aggregating the notional value of SOL trading activity across major spot exchanges, as detailed in the S-1 registration form filed with the US Securities and Exchange Commission (SEC).

Coinbase Custody Trust Company will serve as the custodian.

Increasing interest

This filing follows a similar application by VanEck on June 27, which caused SOL’s price to rise by 7%. However, the 21Shares filing did not immediately affect SOL’s price, which was $140.2 at press time, down over 6% for the day.

In addition to the US filings, Canadian fund manager 3iQ filed for a spot Solana ETF earlier this month, aiming to launch the first such product in North America on the Toronto Stock Exchange. This trend highlights growing confidence and interest in Solana as a viable asset for institutional investment.

The interest in Solana ETFs is rising as the crypto market anticipates regulatory changes and increased acceptance. Despite the recent applications, the lack of a Solana futures product is seen as a potential hurdle for approval. However, some believe a change in leadership could facilitate the process.

Eric Balchunas, a senior ETF analyst at Bloomberg, noted that the approval odds for a Solana ETF are closely tied to potential changes in the US presidency and regulatory attitudes.

According to Balchunas:

“The knee-jerk reaction here is, ‘Oh, this will never be approved because there aren’t Solana futures,’ but if there is a change at POTUS, I think anything is possible.”

Following the approval of spot Ether ETFs in May, Bernstein analysts suggested that Solana might also be classified as a commodity. This comes after the SEC dropped its investigation into Ethereum 2.0, indicating a shift in how the agency views certain digital assets.

Although the regulatory landscape remains uncertain, many industry experts believe Solana’s prominence in the crypto market makes it a strong candidate for ETF approval.

Solana ETF supporters

CNBC’s Brian Kelly recently highlighted Solana as potentially the next major crypto asset to receive ETF approval, following Bitcoin and Ethereum. He noted the success of Bitcoin ETFs, which have collectively amassed Bitcoin valued at around $58 billion, indicating strong demand for regulated crypto investment products.

VanEck’s head of digital research, Matthew Sigel, also made similar comments, comparing Solana to other digital commodities like Bitcoin and Ether, and emphasizing its use in transactions and computational services on the blockchain.

He highlighted Solana’s robust attributes, including high throughput, low transaction fees, stringent security protocols, and a vibrant community, positioning it favorably for an ETF.

As the crypto market evolves and regulatory frameworks adapt, the potential for spot Solana ETFs becoming a reality grows. Investors and industry watchers will continue to monitor developments closely, anticipating significant impacts on market dynamics and investment opportunities.