Grayscale Files for Spot Solana ETF, Awaits SEC Approval

Grayscale, a prominent digital asset manager, has advanced its plans to launch a spot Solana exchange-traded fund (ETF) by filing a Form S-1 with the US Securities and Exchange Commission (SEC) on April 4. This filing aims to convert the existing Grayscale Solana Trust (GSOL) into a publicly traded ETF, marking a significant step forward in the company's efforts to bring a Solana-based investment product to the market.

The submission comes nearly four months after Grayscale's initial 19b-4 filing, which the SEC officially acknowledged on February 6. If approved, the fund will be renamed the Grayscale Solana Trust ETF and listed on the NYSE Arca exchange. The product will initially operate with a cash-only creation and redemption system, as the trust is currently unable to facilitate in-kind transactions with authorized participants due to a lack of definitive regulatory guidance on holding and dealing in SOL in compliance with federal securities laws.

Coinbase will serve as the ETF’s custodian, while BNY Mellon will act as the fund’s administrator and transfer agent. Notably, Grayscale has confirmed that the ETF will not engage in staking or earn yield from Solana’s proof-of-stake network. This decision reflects the ongoing regulatory caution, particularly under the previous SEC administration led by Gary Gensler, which took a hard stance on staking and initiated lawsuits against several crypto platforms.

However, with the new administration in place, there is a renewed effort within the industry to integrate staking into ETF structures for proof-of-stake assets like Ethereum and Solana. Experts argue that this could unlock additional yield for investors while ensuring compliance with federal regulations. The conservative approach taken by Grayscale in avoiding staking aligns with the current regulatory environment, but it also leaves room for future adjustments as the regulatory landscape evolves.

Ask Aime: What impact will the Grayscale Solana ETF have on the cryptocurrency market?

Crypto traders on the decentralized prediction platform Polymarket are placing the odds of SEC approval for a Solana ETF at 83% before the end of the year. However, expectations for an earlier decision are lower, with just a 23% chance of approval predicted before July 31. This indicates a cautious optimism among market participants regarding the timeline for regulatory approval.