On Thursday, July 27, investment firm VanEck took a significant step by submitting an application for a spot ETF Solana to the U.S. Securities and Exchange Commission (SEC). This move sparked market speculation about the approval timeline, with VanEck’s documents highlighting several notable risks.
Unlike Bitcoin and Ethereum, the uniqueness of VanEck’s ETF lies in the absence of Solana futures trading in the U.S. Moreover, VanEck’s documents also mentioned specific risks related to the concentrated ownership of SOL tokens. As of October 2023, the top 100 wallets held nearly one-third of all circulating SOL tokens. This concentration could lead to large-scale sales or distributions by these holders, which could adversely affect market prices.
The decentralization of tokens is crucial for both investors and regulatory bodies. This concentrated ownership may not satisfy the U.S. Securities and Exchange Commission, potentially posing a barrier to the approval of the VanEck Solana ETF.
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Commissioner Carolyn Crenshaw of the U.S. Securities and Exchange Commission previously expressed similar concerns about Bitcoin, with the 16 largest wallets holding 107% of the circulating Bitcoin. In contrast, the largest 100 Ethereum wallets hold 19% of the asset’s supply.
Despite these concerns, Matthew Siegel, Head of Digital Research at VanEck, downplayed the issue, stating that the Solana blockchain is inherently decentralized.
VanEck also highlighted risks associated with Solana’s unique Proof of History (PoH) consensus mechanism. Although PoH allows Solana to process transactions faster than blockchains like Ethereum, it has also led to several prolonged network outages. This issue may be a factor considered by the SEC in deciding whether to approve the Solana ETF.
