The filing by VanEck, a New York City-based investment management company, to launch an exchange-traded fund that follows the price of Solana's native token, SOL, has raised doubts among some crypto experts that the current administration will grant its approval. This is the first attempt to introduce a SOL ETF in the U.S. and is seen as a natural progression following the U.S. Securities and Exchange Commission's approval of Ethereum-based funds. However, few people think it will be successful on the first try.

The SEC's Enforcement Division has explicitly stated that SOL is an unregistered security, which is the biggest legal hurdle preventing a SOL ETF. This was made clear a year ago when the agency filed a complaint against Binance for having a market in solana and 11 other cryptocurrencies. The agency based its judgment on securities laws passed in the early 1930s and the Howey test, which determines when something constitutes an "investment contract". According to the Howey test, if a person invests money in a common enterprise and expects to profit from the labor of others, the SEC can declare an asset to be a security.

Many crypto legal experts disagree with this claim, frequently contending that it makes little sense to compare a token that powers a decentralized, globally diffuse ledger to something like corporate equity. Industry lobbyists at Coin Center, for instance, have produced several reports stating that a blockchain's technical level of decentralization and permissionless as well as a token's distribution should be taken into account.

The SEC has also raised concerns in the past regarding the market surveillance requirements pertaining to spot crypto markets. This was one of the factors contributing to the agency's decade-long deliberation over the first spot bitcoin ETF filing before making an approval, a choice that was mandated by a panel of judges who deemed the SEC's reasoning "arbitrary and capricious".

Qureshi noted that there was a stronger case to be made that BTC and ETH-based ETFs satisfied the SEC's market surveillance criteria because there were established future markets where these assets were traded. The absence of a regulated futures contract market is a primary challenge for Solana. Unlike Bitcoin and Ethereum, which have futures products listed on major U.S. exchanges like CME and CBOE, Solana has not reached this point.

The Chicago Mercantile Exchange (CME) reportedly declined to list a Solana futures fund in late May. According to Bloomberg ETF expert James Seyffart, the lack of a regulated futures market is a significant barrier that might take years to overcome. Another significant hurdle is the approval from the Commodity Futures Trading Commission (CFTC), which oversees futures markets.

Moreover, in its lawsuits against Coinbase and Kraken, the US Securities and Exchange Commission (SEC) classified Solana as a security. This classification presents a significant obstacle to obtaining ETF approval because neither Bitcoin nor Ethereum are classified as securities by the SEC.

Several industry experts are also skeptical about the likelihood of Solana and other cryptocurrency ETFs. For instance, Nikolaos Panigirtzoglou, JPMorgan's managing director and global market strategist, expressed doubts about the approval of Solana ETFs, citing the SEC's unclear stance on the status of various crypto assets. Betting on Polymarket, on the other hand, predicts only a 6% chance that the SEC will approve a Solana ETF by the end of 2024. Meanwhile, no major U.S. firms have formally pursued Solana ETF approval with the SEC. Current Solana-based financial products in the U.S. include the GrayScale Solana Trust and 21Shares' Solana Staking ETP (ASOL), which is listed on European stock exchanges. While the approval of Bitcoin and Ethereum ETFs has fueled speculation about a Solana-based ETF, significant regulatory challenges remain. Nonetheless, the Solana community remains hopeful for a favorable outcome in the near future.