Diving deeper into cryptocurrencies, New York-based investment management firm VanEck has filed to launch an exchange-traded fund (ETF) that will track the price of Solana’s underlying token. brush
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However, some are skeptical that the current government will approve it.
This latest submission indicates: First attempt at launching a SOL ETF in the US While many analysts have said the move was inevitable following the recent approval by the U.S. Securities and Exchange Commission for an Ethereum-based fund, few doubted it would be a success from the get-go.
“There is no way this is going to happen. It seems like they are buying favors and laying the groundwork to get the ball rolling,” Hasib Qureshi, a partner at investment firm Dragonfly Capital, told The Block. “But the SEC has made it clear that it believes SOLs are securities, and this administration will not take them back.”
James Seyffart, an ETF expert at Bloomberg Intelligence, agreed. said to He said there is a chance the fund could be launched around 2025 if there is a new manager in the White House and the SEC. Still, it’s not guaranteed.”
Historically weak
Aside from the U.S. securities watchdog’s historic attempt to thwart cryptocurrency-based ETFs due to concerns about potential market manipulation, the biggest legal obstacle standing in the way of a SOL ETF is the SEC enforcement agency’s explicit statement that SOL is an unregistered security. . That specifically happened a year ago. Binance sued It has Solana and 11 other cryptocurrency markets.
The agency based its opinion on the securities laws passed in the early 1930s and the Howey test, which determines when an “investment contract” is formed. In essence, Howey states that if an individual invests money in a common enterprise and expects to profit from the labor of another, the SEC can declare the asset a security.
Many cryptocurrency legal experts dispute this claim, arguing that it makes little sense to compare tokens, which often support decentralized, globally dispersed ledgers, to corporate assets. For example, an industry lobbyist at Coin Center stated: numerous reports We argue that the decentralized and permissionless level of blockchain technology and the distribution of tokens should factor into the equation.
Blockchain sleuth Ogle noted that while Solana could be considered less decentralized than Ethereum in some ways, this isn’t a “binary” issue. “It depends on where you are on the spectrum from a regulator’s POV (or where each is headed) to determine if you should look at it in the same way,” he said.
“People will say that Ethereum is more decentralized than Solana, and that’s true. However, this does not mean that Solana is centralized. By all observable metrics, Solana is in the top 1% of decentralized networks,” Solana developer and Helius co-founder Mert Mumtaz told The Block.
“To me, SOL is definitely a must-have as a builder as it is needed to i) prioritize transactions, ii) obtain network bandwidth through staking, iii) allocate storage, and iv) pay network fees,” he added.
market surveillance
In the past, the SEC has also raised concerns about market surveillance standards related to spot cryptocurrency markets. This was one of the reasons the SEC waited 10 years for approval after reviewing the first spot Bitcoin ETF filing. That decision was reached by a panel of judges who called the SEC’s reasoning “arbitrary and capricious.”
Qureshi noted that BTC and ETH-based ETFs have a better argument for meeting the SEC’s market surveillance requirements. This is because there are developed futures markets where these assets are traded.
“They won’t be able to meet market surveillance standards without a listed futures market,” Qureshi said.
“I think the SEC will point to the lack of a futures market that would justify a rejection,” said Jake Chervinsky, Variant Fund’s chief legal officer. said.
What is VanEck’s strategy?
Austin Campbell, an associate professor at Columbia Business School, also said it was unlikely VanEck’s application would be approved, adding that the strategy “seems to be getting to the board early.” Other analysts, including Seypart, have questioned whether other companies will follow VanEck as quickly as BlackRock, the world’s largest asset manager, submitted a surprise spot Bitcoin ETF application in mid-2023.
“This seems like a medium-term bet given the timeline for these things,” Campbell added.
It is worth noting that VanEck announced on Wednesday that it would waive fees for Ethereum ETFs. “The best provider for cryptocurrency ETFs.”
VanEck’s application is likely to be hindered by legal challenges, but many legal experts are optimistic that many ETFs will eventually be approved despite a change in administration.
Election Issues
Cryptocurrencies have become a bigger election topic than ever before, and many have predicted that former President Donald Trump’s recent embrace of the cryptocurrency industry could boost his popularity. For example, a DCG-funded survey found: 1 in 5 voters Cryptocurrencies are seen as a major election issue.
Scott Johnson, general partner at Van Buren Capital, said X VanEck’s filing likely wouldn’t look good for President Biden. “At the margin” Because of the widespread perception that his administration is against cryptocurrencies, he added that pushing the boundaries like this, despite the possibility of rejection, is a “smart move,” if only to raise questions about how the SEC has approached crypto regulation.
“It sounds like the SEC is going to give final approval for an ETH ETF soon, so I think final approval for a Solana ETF (assuming the market holds up) is inevitable because from a regulatory standpoint, ETH and Solana are basically the same thing,” University of Kentucky law professor Brian Frye told The Block.
“But I think it will take some time because the SEC is moving slowly and the current SEC leadership is completely unenthusiastic about cryptocurrencies in general and approving these ETFs in particular.” Frye added that ultimately the agency “doesn’t think we have any other choice.”
correction: Correct the spelling of Hasib Qureshi’s name.
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