VanEck’s Executive Head of Digital Assets Research, Matthew Sigel, highlighted a 6-year-old closed case as a potential model for Solana ETF approval.
In an August 20th X post, Sigel reiterated his firm’s position that Solana should be treated as a commodity, similar to Bitcoin and Ethereum. This classification is crucial for Solana to have its own US-based exchange-traded fund (ETF). He noted:
“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 referred to a closed 6-year-old court case involving My Big Coin, a fraudulent crypto payments company.
In 2018, the US Commodities Futures Trading Commission (CFTC) charged the founders of My Big Coin ($MBC) with fraud for deceiving customers about the token’s utility and value, violating the Commodities Exchange Act.
The defendants argued for the case’s dismissal, claiming that $MBC was not a commodity since the futures contracts that reference it do not exist.
However, this argument was rejected by the judge, who ruled that $MBC was a “virtual currency,” akin to Bitcoin, and fell under the definition of a commodity.
The judge made an analogy with natural gas, a point referenced by Sigel in his tweet, suggesting that Solana might be similarly classified as a commodity. He said:
“This same logic could apply to digital assets like Solana, and could shape the future of ETF regulation.”
But in the near term, other ETF commentators are less optimistic.
Bloomberg ETF analyst Eric Balchunas commented that, after Cboe reportedly removed its 19b-4 filings for Solana ETFs from its website, they now have a “snowball’s chance in hell of approval.”
On Aug. 16, reports emerged that Cboe had removed the 19b-4 filings for two prospective Solana ETFs from its website’s “Pending Rule Changes” page.
Some have speculated the United States Securities and Exchange Commission (SEC) rejected the filings before they could even undergo formal consideration due to the regulator’s “concerns” over Solana’s classification as a security.
However, Balchunas offered a glimmer of hope, citing the upcoming US election as a crucial factor that could influence the approval of a Solana ETF.
In response to a comment, he noted a “near-zero chance in 2024,” and added that “if Harris wins, there’s probably a near-zero chance in 2025 too. Only hope IMO is if Trump wins.”
“Solana ETF not happening anytime soon under the current administration,” wrote ETFStore president Nate Geraci in an earlier X post on Aug. 17.
However, Sigel recognized this setback but noted that VanEck’s S-1 filing is “still in play” despite Cboe removing the 19b-4 on its website. He said:
“Remember that Exchanges like Nasdaq & CBOE file rule changes (19b-4) to list new ETFs. Issuers like VanEck are responsible for the prospectus (S-1). Ours remains in play.”
Twitter text:
“Digging deeper into commodity classification: Courts have drawn parallels between natural gas and digital tokens. For natural gas, it doesn’t matter if the gas is delivered to different hubs like Henry Hub in Louisiana or elsewhere: if futures contracts exist for one, all types…” — matthew sigel, recovering CFA (@matthew_sigel) August 20, 2024
“Nice flow chart showing how the Solana ETF filings never made it past Step 2 (the SEC failed to ack them) = DOA. So the exchanges withdrew 19b-4s altho the issuers’ S-1s are still active. A snowball’s chance in hell of approval unless there’s change in leadership via @JSeyff” — Eric Balchunas (@EricBalchunas) August 20, 2024
“Solana ETF not happening anytime soon under the current administration,” — ETFStore president Nate Geraci (@NateGeraci) August 17, 2024
