- Solana’s explosive growth makes it a strong ETF contender
- The SEC’s stance on Solana’s security classification is a hurdle
- Market analysts predict an approval, but nothing is guaranteed
- Concerns over decentralization and network stability remain
Solana has been on fire lately. It’s dominating the DeFi space, attracting institutions, and proving itself as one of the top players in crypto. With Bitcoin and Ethereum getting ETF approvals, many are wondering—will Solana be next?
There is no reason to think SEC has decided SOL is a non-security.
— Jake Chervinsky (@jchervinsky) July 30, 2024
That they don't want to do discovery on a dozen tokens in the Binance case appears to be a litigation tactic, not a change in policy.
Note the SEC still calls these tokens securities in the other exchange cases.
The answer isn’t so simple. While some experts are optimistic, others are hitting the brakes. The biggest issue? The SEC hasn’t made up its mind on whether Solana is a security. That alone could delay an ETF approval for months—or even years.
Regulators aren’t exactly known for moving fast, and Solana’s past issues with network outages and centralization don’t help its case. The SEC has been strict about ETF approvals, and while market demand is there, approval isn’t just about popularity. Bitcoin and Ethereum had to clear major legal and structural hurdles before getting the green light.
What’s Holding Solana Back?
For starters, the SEC flagged Solana as a security in lawsuits against Binance and Coinbase. Those cases have since been dropped, but the uncertainty remains. Unlike Bitcoin, which is clearly classified as a commodity, Solana still exists in a regulatory gray area.
Then there’s the issue of decentralization. Solana’s validator system requires high-powered hardware, which means fewer people can participate. Compare that to Ethereum, which has over a million validators, and you start to see why some experts think the SEC might hesitate.
We expect a wave of cryptocurrency ETFs next year, albeit not all at once. First out is likely the btc + eth combo ETFs, then prob Litecoin (bc its fork of btc = commodity), then HBAR (bc not labeled security) and then XRP/Solana (which have been labeled securities in pending… pic.twitter.com/29vMdciZxE
— Eric Balchunas (@EricBalchunas) December 17, 2024
Despite all this, the prediction market Polymarket gives Solana an 82% chance of ETF approval in 2025. Some believe that if Donald Trump returns to office, a more crypto-friendly administration could push things forward. Others, like Bloomberg’s Eric Balchunas, think Litecoin or Hedera might get the nod first, simply because they have fewer regulatory headaches.So, will a Solana ETF happen in 2025? It’s possible—but it won’t be easy. The SEC moves at its own pace, and until the regulatory dust settles, the wait continues.
