Is Solana a security? Here’s why SEC pulled the plug on SOL ETFs

The SEC and exchange aggregator CBOE halted the process for a Solana ETF over concerns of SOL’s security status.
CBOE removed the 19b-4 filings, likely reflecting the regulator’s caution given previous comments on SOL.
Nate Geraci, an ETF expert, suggests that Solana ETFs don’t have a chance to secure approval under the current administration in the US.
Solana gains 2% to $147 on Tuesday.

The US Securities and Exchange Commission (SEC) has halted the process of filing Solana ETFs amidst concerns over the status of Solana, according to a report from The Block. In a lawsuit filed against Coinbase, the SEC had listed SOL as a security, raising questions about the potential status of SOL.

While there is no legal clarity about the status of SOL, the exchange operator Chicago Board Options Exchange (CBOE) has opted to remove the related 19b-4 filings of issuers from its website.

Solana extended gains on Tuesday, up nearly 2% at the time of writing.

Solana ETFs filings disappear from CBOE website

The CBOE pulled Solana ETF 19b-4 filings by issuers from its website during the ongoing discussion on the asset’s status. The SEC expressed concerns over SOL’s status, the report from The Block says.

The SEC and CBOE agreed not to file 19b-4 forms to the Federal Register since that would push the approval process forward. It remains unclear whether issuers will submit new filings for Solana ETFs in the future and push for legal clarity on the asset.

Matthew Sigel, Head of digital assets research at VanEck, said on his X account that the firm believes SOL is a commodity, like Bitcoin and Ethereum. This belief is backed by informed legal perspectives, per Sigel. The executive notes that Solana made progress in decentralization and the top 100 holders of the asset now control 27% of the supply, a significant reduction from 2023.

Sigel is quoted from a recent tweet on X:

We remain committed to advocating this position alongside our exchange partners to the appropriate regulators

Some have noticed that the 19b-4 for the VanEck Solana ETF has been removed from the CBOE website.
Remember that Exchanges like Nasdaq & CBOE file rule changes (19b-4) to list new ETFs. Issuers like VanEck are responsible for the prospectus (S-1). Ours remains in play. https://t.co/9rbSHciSdy
— matthew sigel, recovering CFA (@matthew_sigel) August 19, 2024

XRP received legal clarity, Solana still in gray area

The SEC’s lawsuit against Ripple provided XRP legal clarity in a 2023 ruling. Judge Analisa Torres ruled that secondary market sales of XRP are not securities.

The July 2023 ruling was upheld in the final outcome of the SEC vs. Ripple lawsuit. Unless the SEC appeals the ruling, XRP enjoys a non-security status when sold on exchanges, while other altcoins like Solana wait.

Expert says Solana ETF’s don’t stand a chance at the time

Nate Geraci, president of investment advisor The ETF Store, said that Solana ETFs won’t have a chance of securing approval under President Biden’s administration in the US.

Yes…

Solana ETF not happening anytime soon under current administration. https://t.co/z18gRIFzEr pic.twitter.com/zSL5PMjDC6
— Nate Geraci (@NateGeraci) August 17, 2024

Scott Melker, crypto analyst, notes that the SEC is likely exercising caution given its previous stance on SOL, in lawsuits filed against exchanges like Coinbase and Kraken.

SEC Halts Solana ETF Progress

The SEC and Cboe halted the filing process for Solana ETFs due to concerns over Solana's classification as a security. Following discussions, they agreed not to submit 19b-4 filings, which would have initiated the approval process. This move… pic.twitter.com/RiJjACpJh9
— The Wolf Of All Streets (@scottmelker) August 20, 2024

Solana extends gains by nearly 2%, trading at $147 at the time of writing.

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