VanEck's bold move to file for a spot Solana ETF on June 27 has sparked excitement in the crypto community, but it also highlights significant risks that could impact the approval process. While many are predicting a timeline for approval, it's crucial to understand the unique challenges Solana faces compared to other cryptocurrencies.

One of the main risks identified in VanEck's filing is the concentrated ownership of SOL tokens. By November 2023, the 100 largest Solana wallets held nearly one-third of all the SOL in circulation. This level of concentration is much higher than Bitcoin and Ethereum, which could raise concerns with the SEC about the stability of the Solana market. Large sales or distributions by these major holders could have a significant impact on the price.

Token decentralization is a key factor for both investors and regulators, so this concentrated ownership of Solana might not sit well with the SEC. In the past, SEC Commissioner Caroline Crenshaw expressed similar concerns about Bitcoin ownership when approving the spot Bitcoin ETF.

Another risk specific to Solana is its unique Proof of History consensus mechanism. While this allows for faster transaction processing, it has also been the cause of several hours-long network outages due to issues with PoH in recent years. The SEC might take this into consideration when deciding on the spot Solana ETF approval.

Despite these risks, the market seems to be looking past them for now. Soon after the news of the filing, the Solana price surged in double digits, rallying all the way to $150. Currently, the SOL price continues to hold closer to these levels.

As the SEC reviews VanEck's filing, it will be crucial for investors to stay informed about the potential risks and rewards associated with a spot Solana ETF. While the approval could bring more institutional investment and stability to the Solana ecosystem, the concentrated ownership and network outage risks will need to be carefully considered.