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The Brazilian Securities and Exchange Commission (CVM) has greenlit a Solana exchange-traded fund (ETF), showing the country’s growing support for the digital assets. However, despite the ETF approval, Solana (SOL) still struggles to break the key $150 level.
But it seems a regulatory win is not enough to save struggling Solana.
According to CoinGecko, the fifth-largest cryptocurrency is currently trading at around $142, down 1.8% in the last 24 hours and around 30% over the past month.
Several factors are contributing to the low price, like a fading memecoin frenzy on the Solana network, declining network activity, and regulatory scrutiny which dampens the future of a spot ETF with direct exposure to SOL.
Tokens Under Pressure
The price decline comes at a time when the overall market enters a correction, with Bitcoin’s (BTC) price has stagnated in recent weeks. BTC is hovering around the $59,000 – $60,000 range, failing to break through the key level many times.
In tandem with the overall market sentiment, there are less activities in DeFi, NFTs, and gaming, which could discourage investors who participate in the Solana ecosystem for those reasons.
The U.S. SEC’s potential classification of SOL as a security also matters. Experts believe that could lead to increased regulatory scrutiny and potential penalties. Plus, that label could fuel concerns about the SEC’s rejection of spot Solana ETF in the US.
As reported by The Block, the SEC had rejected CBOE’s 19b-4 filings for VanEck’s and 21Shares’ spot Solana ETFs. That confirmed the regulator’s stance on SOL, unlike Bitcoin and Ethereum. Over the weekend, those filings were also removed from the exchange’s website.
The path to Solana ETF approvals in the U.S. remains uncertain, which adds up bearish momentum to the SOL market despite regulatory progress in Brazil.
Following the approval of Brazil’s first Solana ETF issued by QR Asset Management, the CVM cleared the path for the next Solana product.
The upcoming fund is currently in its pre-operational phase, preparing for its debut to investors. It will be put under joint management of prominent asset manager Hashdex and BTG Pactual.
The ETF marks another major step for Hashdex, which manages over $962 million in assets. Since its inception, Hashdex has introduced several innovative crypto ETFs, including the world’s first crypto index ETF in partnership with Nasdaq.
The firm continues to broaden its portfolio, with a recent proposal to offer a dual Bitcoin and Ethereum ETF to the U.S. SEC.
Will The U.S. Follow Suit?
Recent developments in Brazil bring hopes that the SEC may want to rethink the decision on spot Solana ETF. Still, U.S. Solana products stand little chance of approval under the current SEC leadership, according to Bloomberg ETF analyst Eric Balchunas, commenting after the recent rejection.
“A snowball’s chance in hell of approval unless there’s a change in leadership,” Balchunas commented on an X post dated August 20.
The withdrawals came amid speculations that the SEC had dismissed the filings due to concerns over Solana’s classification as a security.
“Yes, near-zero chance in 2024, and if Harris wins, there’s probably near-zero chance in 2025 too. Only hope IMO is if Trump wins,” he added.
ETF Store president Nate Geraci said on August 17 that the Solana ETF is not likely to happen soon under the current administration. Geraci previously noted that the ETF’s approval would depend on Solana being classified as a commodity.
For VanEck’s head of digital asset research, Matthew Sigel, Solana is a commodity. His belief is supported by legal perspectives that recognize certain crypto assets may function as securities in primary markets but behave more like commodities in secondary markets.
Sigel also used the Commodity Futures Trading Commission’s 2018 case against My Big Coin Pay as reference, which helped establish the commodity status of virtual currencies like Bitcoin.
