SEC Requests Updated S-1 Filings from Solana ETF Issuers, Approval Possible by July

The U.S. Securities and Exchange Commission (SEC) has directed potential issuers of spot Solana (SOL) exchange-traded funds (ETFs) to submit revised S-1 registration forms by next week, according to a June 10 report by Blockworks. According to sources cited by Blockworks, the SEC has stated it will provide feedback within 30 days of S-1 form submissions. This suggests that Solana ETFs could be approved within three to five weeks, potentially as early as July. The move reflects the SEC’s ongoing engagement with altcoin ETFs, potentially setting a precedent for other cryptocurrencies like XRP, Litecoin, and Dogecoin.

SEC’s Request Signals Regulatory Progress

According to sources cited by Blockworks, the SEC has asked issuers to refine language related to in-kind redemptions and staking mechanisms in their S-1 filings, with feedback expected within 30 days of submission. This timeline suggests that Solana ETFs could be approved within three to five weeks, potentially by mid-to-late July. The SEC’s openness to including staking—a core feature of Solana’s proof-of-stake blockchain—within the ETF structure is particularly notable, as it could set a precedent for future altcoin ETFs. The process aligns with the SEC’s standard ETF approval framework, which requires both 19b-4 forms (for exchange rule changes) and effective S-1 registration statements. While the 19b-4 approvals are critical, the S-1 updates indicate that issuers are addressing specific regulatory concerns, such as redemption mechanics and compliance with securities laws.

The SEC’s request follows earlier filings by major asset managers, including Grayscale, VanEck, 21Shares, Bitwise, and Canary Capital, all of whom submitted S-1 forms for spot Solana ETFs in 2024. While the 19b-4 approvals remain pending, the call for updated S-1 filings suggests regulators are addressing specific compliance concerns, such as redemption mechanics and adherence to securities laws. Bloomberg ETF analyst James Seyffart noted that these updates reflect active discussions between the SEC and issuers regarding the nuances of incorporating staking into ETF structures.

Solana’s Market Response and Industry Context

Following the news, Solana’s price rose to approximately $164 as of press time, marking a 3.1% increase over the past 24 hours. Companies with exposure to Solana also saw significant gains. SOL Strategies (CYFRF), which holds Solana as part of its treasury strategy, surged 11.95%, while DeFi Development Corp (DFDV) climbed 13.22% after the announcement. These market movements underscore investor optimism about the potential for Solana ETFs to drive mainstream adoption.

Solana, known for its high-throughput blockchain and low transaction costs, has gained traction as a leading altcoin, with a market capitalization exceeding $86.6 billion as of June 11. Its ecosystem supports a wide range of decentralized applications (dApps), from decentralized finance (DeFi) to non-fungible tokens (NFTs), making it a prime candidate for ETF exposure.

Broader Implications for Altcoin ETFs

The SEC’s engagement with Solana ETF issuers comes amid growing interest in altcoin-based investment products. Over a dozen firms have filed applications for ETFs tracking assets like XRP, Litecoin, and Dogecoin, though none have been approved to date. Bloomberg ETF analyst Eric Balchunas expressed optimism about an “Altcoin ETF Summer,” with Solana likely leading the charge, though he cautioned that altcoin ETF products may attract smaller inflows. “We have a little saying on the team: the further away you get from btc, the less assets there will be.” Seyffart predicted the likelihood of altcoin ETFs receiving SEC approval this year. He estimated a 90% chance for Solana, Litecoin, or cryptocurrency index ETFs, over 80% for XRP, Dogecoin, and HBAR, and 75% for Cardano, Polkadot, and Avalanche.

Under former Chair Gary Gensler, the SEC’s history with crypto ETFs has been cautious, with spot Bitcoin ETFs approved in January 2024 after years of deliberation. Solana’s classification as a potential security has previously complicated its ETF prospects. However, the agency’s recent acknowledgment of Solana-related filings suggests a shifting stance, particularly following changes in SEC leadership.

As issuers refine their S-1 filings, the crypto industry will closely watch the SEC’s feedback, particularly on staking and redemption structures. Approval of Solana ETFs could open the door for other altcoin products, potentially reshaping the investment landscape for digital assets.