Alex Thorn, Galaxy Digital's Head of Research, recently analyzed the filings for Solana Exchange Traded Products (ETPs) by VanEck and 21Shares with the US Securities and Exchange Commission (SEC) on June 28. These filings represent a bold initiative to integrate Solana (SOL) into the structured framework of regulated financial markets, similar to established products for Bitcoin and Ethereum.

VanEck's proposal, detailed in their S-1 filing, aims to launch a trust based on commodities that directly holds Solana. This ETP would closely track the asset's market price without engaging in staking activities, distinguishing it from some existing crypto ETPs.

Following the announcement, SOL saw an approximately 8% price increase, signaling positive market reception. However, the filing is in its early stages and lacks detailed operational structures such as custodian arrangements, cash management, and authorized participant specifics. These aspects typically undergo refinement through subsequent amendments as the product progresses towards final approval.

The likelihood of a Spot Solana ETF remains uncertain due to procedural hurdles. VanEck has yet to file the required 19b-4 form, which initiates the SEC's formal review process. Bloomberg's analyst James Seyffart notes that this process could extend up to 240 days once commenced, suggesting a potential final decision by March 15, 2025. This timeline includes regulatory checkpoints and public comment periods standard for new financial products.

The SEC's current stance on Solana as an unregistered security, particularly amidst ongoing litigation involving Coinbase, complicates the approval process for a Solana-based ETP. Alex Thorn from Galaxy Digital highlights this regulatory challenge, noting the SEC's historical caution towards crypto ETPs. Approval pathways typically progress through futures markets and futures-based ETPs before considering spot ETPs, a journey previously navigated by Bitcoin and Ethereum with varying regulatory responses.

The recent passage of the FIT21 Act in the US House, which clarifies regulatory boundaries between the SEC and CFTC, could influence future cryptocurrency regulations. Thorn suggests that such legislative clarity might improve the prospects for ETP approvals beyond Bitcoin and Ethereum, potentially including Solana.

In conclusion, while VanEck's proactive filing history and market dynamics suggest optimism, the road to approving Solana ETPs is rife with regulatory complexities and uncertainties. At the time of reporting, SOL was trading at $147.54.