How the solana fund filings in the US, Canada differ
VanEck’s proposed Solana Trust may have a tough time getting past the SEC given its structure and the regulatory precedent
Furkan Cubuk/Shutterstock and Adobe modified by Blockworks
Though VanEck’s proposal for a US spot solana ETF came just days after a SOL fund filing in Canada, the two are very different.
The Canadian proposal by asset manager 3iQ may have an easier path to approval, while the fate of VanEck’s product could depend on a change of precedent (and administration) within the Securities and Exchange Commission.
Toronto-based 3iQ revealed plans last week to bring the first solana exchange-traded product (ETP) in North America. The offering, if permitted by the Ontario Securities Commission, would trade on the Toronto Stock Exchange.
Read more: Lightspeed Newsletter: North America’s first solana ETP pitch is here
But the 3iQ product is a closed-end fund, meaning it would offer a fixed number of shares. The VanEck Solana Trust’s authorized participants, meanwhile, would continuously create and redeem shares based on market demand.
Put another way, the VanEck fund would operate like the ETFs many investors are more accustomed to — mirroring the spot bitcoin funds launched in January or the spot ETH funds expected to come to market as soon as next week.
3iQ’s Solana Fund would be a bit “more similar” to Grayscale Trust products, Bloomberg Intelligence analyst James Seyffart said on X.
Both Seyffart and Chris Matta, president of 3iQ Digital Assets, noted that Canadian closed-end funds include a mechanism that keeps premiums and discounts from straying too far from the net asset value. The 3iQ fund’s shares would also trade on the Toronto Stock Exchange rather than OTC Markets Group (where Grayscale Solana Trust shares are listed).
Chance of approval?
Matta told Blockworks last week that solana has hit a “stage of maturity” that spurred 3iQ’s filing — pointing to SOL’s roughly $60 billion market cap, for example.
But he added that regulators would likely favor the closed-end structure first because a regulated futures market for solana doesn’t exist yet. The CME Group offers futures markets for BTC and ETH.
This prevents authorized participants (typically regulated banks in Canada) from hedging their exposure during the creation and redemption process, Matta said.
“Frankly, I think that’s why there haven’t been filings in the US for solana ETFs,” he told Blockworks last week.
3iQ launched similar funds focused on BTC and ETH in 2020 before Canada’s first spot bitcoin and ether came to market the following year.
“Historically, other closed ended vehicles have converted to ETFs when regulators could get comfortable, so that’s something that can be considered in the future,” Matta added in a June 20 X post.
But VanEck is going straight for the traditional ETF structure.
Read more: VanEck kicks off solana ETF bid in the US
It is worth noting that, unlike the 3iQ fund, the VanEck product would not stake its SOL holdings. Despite the omission of staking — a feature the SEC signaled it was not comfortable with during the ether ETF proposal process — it would appear the VanEck solana product indeed has an uphill battle ahead.
Industry watchers told Blockworks last month they didn’t expect the current precedent (the SEC needing to see regulated futures markets before approving spot products for that asset) to change in the near-term.
Read more: Why more US spot crypto ETF approvals may be unlikely in the near term
A win by Donald Trump in November’s US presidential election — and a possible subsequent SEC shake-up — could change that down the line.
Also, SEC Chair Gary Gensler has acknowledged bitcoin as a commodity (rather than a security). The agency left the status of ETH pretty unclear until last month’s spot ether ETF 19b-4 proposal approvals.
The SEC labeled SOL an unregistered security in lawsuits against Coinbase and Binance last year — a fact likely to complicate the fate of the VanEck product for now.
Matthew Sigel, VanEck’s head of digital assets research, argued in an X post that “SOL’s decentralized nature, high utility, and economic feasibility align with the characteristics of other established digital commodities.”
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
