SEC Hits Pause on Solana ETF: Issuers Forced Back to Drawing Board

Regulators just slammed the brakes on crypto's hottest ETF race—and Wall Street's fee-hungry machine isn't happy.

The SEC kicked back Solana ETF applications today, demanding major revisions from would-be issuers. No rubber-stamp approval here: lawyers will be billing overtime to untangle the agency's laundry list of concerns.

Behind the scenes: This delay exposes the SEC's playbook. They'll slow-roll innovation until issuers either give up or meet impossible standards. Meanwhile, traders miss another bull run opportunity while suits in D.C. debate semantics.

Silver lining? Every regulatory hurdle Solana clears now makes eventual approval inevitable. The blockchain that survived FTX's collapse won't be stopped by paperwork.

Final thought: Watch how fast these 'cautious' regulators move once BlackRock starts whispering about lost revenue.

In Brief

• The SEC has delayed its decision on Fidelity’s proposed Solana (SOL) ETF, extending the review process.
• Issuers were asked to amend and refile their S-1 documents by the end of July.
• Analysts, including Bloomberg’s James Seyffart, view the delay as expected and anticipate approval later this year.
• Despite the regulatory hold-up, Solana has shown strong on-chain activity and capital inflows, surpassing Ethereum.

SEC Requests Updated Filings as Review of Solana ETFs Continues

In an update on July 7, the Securities and Exchange Commission asked prospective issuers of Solana-based ETFs to respond to comments and re-file amended S-1 documents before the end of July.

The SEC has also invited public comments on whether the proposed rule to list and trade Solana ETF shares effectively prevents fraud and manipulation or raises new concerns. Interested parties can submit their views within a set comment period, with an opportunity for rebuttals to be filed afterward.

This step extends the review process and was expected by analysts following the ongoing evaluation of some crypto ETF applications.

Although the SEC has until October 10 to make a final decision regarding the Solana ETF proposal, current developments suggest that the evaluation may be completed earlier. The pace of this process may be influenced by recent events, particularly the automatic clearance of another Solana-linked fund under a separate legal structure.

The REX-Osprey SOL and Staking ETF, which operates under the Investment Company Act of 1940, became effective last week without objection from the SEC. This approval route differs from the process used for most crypto ETFs, including Fidelity’s, but it may have implications for how the SEC handles comparable products going forward. A source familiar with the situation said,

I think that the SEC has some pressure to approve these quicker than waiting all the way to October, especially with that Rex Shares product that got approved last week

Technical Requirements and Regulatory Engagement

The SEC has been closely examining Solana ETF applications as part of its wider review of crypto funds. In June, the agency requested that issuers update their S-1 filings to include more detailed information on important operational aspects. 

This includes how staking rewards are handled and the mechanisms for creating and redeeming ETF shares through in-kind processes.

These details are critical to the commission’s evaluation, as they help determine whether the proposed structure aligns with existing investor protection standards.

James Seyffart, an ETF analyst at Bloomberg, indicated that the delay in Fidelity’s Solana ETF application was anticipated. He has previously predicted that ETFs based on Solana, XRP, and Dogecoin will likely receive approval later this year. 

Seyffart noted that the SEC is still working on a broader framework for digital asset exchange-traded products, which is influencing the timing of these decisions.

A Closer Look at Solana’s Network and Capital Strength

While regulatory decisions are still pending, Solana is showing strong activity on-chain and drawing major investor interest.

Here’s why Solana’s momentum is hard to ignore:

• Over 14.6 million active addresses on Solana in a single day show massive user engagement.
• Solana pulled in $8.3 billion in capital in 7 days, surpassing Ethereum’s $6.2B.
• SOL/ETH price ratio dropped to 0.0586, its lowest this year—yet capital inflow remains strong.
• Solana’s user activity signals sustained growth despite market fluctuations.

If approved ahead of others, a Solana ETF would mark the first U.S.-based crypto fund tied to a digital asset outside of Bitcoin and Ethereum. Meanwhile, proposed ETFs for assets like XRP, Dogecoin, and Litecoin remain under review, with no decisions finalized yet.

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