On Thursday, the investment company VanEck took a significant step by submitting a spot ETF Solana application to the U.S. Securities and Exchange Commission (SEC).
This move has sparked speculation in the market about the approval timeline, and VanEck’s filing emphasizes several notable risks.
Unlike Bitcoin and Ethereum, the unique feature of VanEck’s Solana ETF is that there are no Solana futures trading in the United States. In addition, VanEck’s filing also mentioned specific risks associated with the concentration of ownership of SOL tokens. As of October 2023, the top 100 wallets of Solana hold almost one-third of all circulating SOL tokens. This concentration could lead to significant sales or distributions by these holders, potentially having a detrimental impact on market prices.
The decentralization of tokens is crucial for both investors and regulatory authorities. This concentration of ownership may not satisfy the U.S. Securities and Exchange Commission, thus posing a potential obstacle to the approval of the VanEck Solana ETF.
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SEC Commissioner Carolyn Crenshaw previously expressed similar concerns about Bitcoin, with the top 16 wallets holding 107% of the circulating Bitcoin supply. In contrast, the top 100 Ethereum wallets hold 19% of the asset’s supply.
Despite these concerns, VanEck’s Director of Digital Research, Matthew Siegel, downplayed the issue and stated that the Solana blockchain is fundamentally decentralized.
VanEck also highlighted risks associated with Solana’s unique Proof of History (PoH) consensus mechanism. While PoH allows Solana to process transactions faster than blockchains like Ethereum, it has also led to several lengthy network outages. This issue may be a factor that the SEC considers when deciding whether to approve the Solana ETF.
