SEC Delays Fidelity Solana ETF Decision Amid Regulatory Uncertainty

The launch timelines for crypto ETFs remain uncertain as the Securities and Exchange Commission (SEC) continues to deliberate on various proposals. Recently, the SEC delayed its decision on Fidelity’s spot Solana ETF proposal, a move that, while not surprising, underscores the regulatory hurdles that still need to be addressed before approvals can be granted.

In June, the SEC engaged with issuers, sparking optimism about potential ahead-of-schedule rulings before the October deadlines. However, a person close to the filings confirmed that the SEC has asked asset managers to respond to new questions about the product structure by July 31. This person also noted that the SEC might be waiting to develop anticipated “generic listing standards” before approving Solana funds, with the current expectation being that these standards will be finalized closer to or in October.

Given the unprecedented nature of these decisions, there is a lack of confidence regarding timelines. SEC Commissioner Hester Peirce has repeatedly urged patience, suggesting that the SEC is unlikely to rush its judgments.

In another development, the SEC approved NYSE Arca’s 19b-4 to list the Grayscale Digital Large Cap Fund (GDLC) as an ETF. However, a subsequent letter from the SEC’s deputy secretary to NYSE Group’s senior counsel stated that this order was “stayed” until further notice from the regulator. A Grayscale spokesperson acknowledged the unexpected nature of this development, highlighting the dynamic regulatory landscape surrounding digital asset products.

Despite this setback, Grayscale continues to pursue the GDLC listing. Similarly, Bitwise is still working to convert its Bitwise 10 Crypto Index Fund to an ETF, and Hashdex aims to add assets to its Nasdaq Crypto Index US ETF. However, there have been no updates on the progress of these proposals, leaving the industry in a holding pattern.

Meanwhile, Yorkville America Digital, in partnership with Trump Media and Technology Group, filed for a Truth Social Crypto Blue Chip ETF. The proposed fund’s holdings would include bitcoin (70%), ether (15%), solana (8%), cronos (5%), and XRP (2%). The rationale behind these allocations, particularly the inclusion of cronos, remains unclear.

In summary, while there has been significant paperwork progress, it has not yet translated into launches, except for the REX-Osprey SOL Staking ETF, which is structured differently from traditional crypto trusts. The demand for other single-asset crypto ETFs and crypto index funds remains to be seen once they go live in the US. Some analysts believe that the bigger opportunity lies in crypto index funds, which are tailored for investors who do not want to spend time picking individual winners.