Brazil Approves Second Spot Solana ETF

Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), has given the green light for a second spot Solana exchange-traded fund (ETF).

According to a filing on the CVM website, the new Solana ETF will be offered by Brazil-based asset manager Hashdex and is currently in a “pre-operational” stage.

The move follows Brazil’s approval on August 8 of its first Solana ETF, overseen by QR Asset, a Brazilian asset management firm, and managed by Vortx, a service provider for fund operations.

Meanwhile, in the U.S., efforts to launch spot SOL ETFs have hit roadblocks.

In June, Asset managers VanEck and 21Shares filed for spot Solana ETFs following the SEC’s approval of spot Ethereum ETFs.

But Solana bulls’ hopes were dashed on August 16 when the Chicago Board Options Exchange (CBOE) removed the 19b-4 filings for two proposed Solana ETFs from its “Pending Rule Changes” page. Some speculated that these filings were pulled due to concerns from the Securities and Exchange Commission (SEC) over Solana’s classification as a security.

Bloomberg ETF analyst James Seyffart explains that when an exchange like the CBOE files the initial 19b-4 application with the SEC, the regulator also posts the filing on its website.

For instance, the CBOE filed a Solana ETF 19b-4 on July 8. Typically, around 14 days later, the SEC posts the 19b-4 filing on its website, officially starting the clock for regulatory review. This step is crucial because it sets specific deadlines for the SEC to make a decision. However, in this case, the Solana ETF filing was never posted to the SEC website.

Another Bloomberg ETF analyst, Eric Balchunas, claimed that the filings never appeared on the SEC’s website. “A snowball’s chance in hell of approval unless there’s a change in leadership,” Balchunas tweeted.

He suggested that the outcome of the presidential election could influence the future of Solana ETFs in the U.S. “Yes, near-zero chance in 2024, and if Harris wins, there’s probably near-zero chance in 2025 too,” he added. “Only hope imo is if Trump wins.”

Nate Geraci, president of ETFStore, shared similar skepticism. “Solana ETF not happening anytime soon under the current administration,” he tweeted on Aug. 17.

Geraci believes that the approval of a Solana ETF would depend on Solana being classified as a commodity rather than a security.

Is Solana a Commodity?

VanEck’s Head of Digital Assets Research, Matthew Sigel, says his firm still believes Solana is a commodity — similar to Bitcoin.

“This belief is informed by evolving legal perspectives, where courts and regulators have begun to recognize that certain crypto assets may function as securities in primary markets but behave more like commodities in secondary markets,” Sigel tweeted on Aug. 20.

Classifying cryptocurrencies as either securities or commodities is crucial for regulatory purposes. Securities include stocks, bonds, and derivatives, representing ownership or creditor relationships, and are regulated by the SEC. Securities must meet the criteria outlined in the Howey Test, which defines a security as an investment where profits are expected primarily from the efforts of others.

On the other hand, commodities include raw materials and primary agricultural products, of which trading is regulated by the CFTC. Commodities are interchangeable and fungible, meaning they can be swapped with other goods of the same type.

Solana ETF ‘Unlikely’ in the U.S.

Ryan Lee, Chief Analyst at Bitget Research, told The Defiant that a spot Solana ETF approval in the U.S. seems unlikely.

“The chances of a Solana ETF approval in the US are highly limited, considering the nature of the country’s ETF market,” said Lee. “It is generally considered impossible for a spot ETF to go live without a futures-related product going live first.”

He added that Solana is relatively new and lacks the infrastructure for traditional finance hedging, unlike Bitcoin and Ethereum.

“The SEC may classify SOL as a security, thus limiting its chances of getting an ETF listing,” Lee added.

Several criteria must be met for an ETF to gain approval, including healthy liquidity, decentralization, resistance to price manipulation, and regulatory classification of the underlying asset.