Solana Spot ETF Approval Progress: SEC Focuses on Physical Redemption and Stake Mechanism

Recently, the U.S. Securities and Exchange Commission (SEC) requested potential Solana Spot ETF issuers to update their S-1 application documents. This move is interpreted by the market as an important signal that the Solana ETF has entered the substantial review stage. It is reported that the SEC has notified several agencies planning to launch Solana Spot ETFs to submit the updated S-1 registration statement documents within a week.

The SEC will provide review feedback within 30 days of the document submission, focusing on the modifications to the physical redemption language and the handling of the stake mechanism. These two aspects have become key issues in the approval process for cryptocurrency Spot ETFs.

Physical redemption refers to the ability of investors to exchange ETF shares for the corresponding underlying assets (such as SOL) instead of cash. The SEC will closely examine the issuer's execution plan for physical redemption, the method of calculating asset value, whether partial or full assets can be redeemed in cash, and other details. This mechanism directly impacts the market transparency, liquidity, and arbitrage efficiency of ETFs, and is an important basis for the SEC's assessment of whether ETFs are suitable for investors.

The staking mechanism is another focus of market attention. As a native value-added method of PoS public chains, staking can bring on-chain returns to holders. Data shows that Solana's current staking rate is 65.44%, with a staking yield of 7.56%, significantly higher than Ethereum. Previously, the SEC had repeatedly avoided staking-related clauses in the Ethereum ETF approval process, concerned about potential securities yield attributes. However, the latest news indicates that the SEC is currently open to the inclusion of a staking mechanism in the Solana Spot ETF, requiring issuers to provide sufficient legal explanations and implementation details.

Since Grayscale first submitted the 19b-4 filing for the Solana Spot ETF last year and it was officially accepted by the SEC in February this year, the Solana ETF has entered a substantive regulatory process. Although the SEC announced at the end of May that it would delay the approval of some Solana ETFs, the recent S-1 filing amendment directive indicates that the regulatory body is no longer dismissing the feasibility of the Solana ETF, but is instead shifting to a phase of rule negotiation and detail refinement.

Currently, several institutions including Fidelity, Franklin Templeton, VanEck, and Bitwise have submitted applications for a Solana Spot ETF. As a result of this news, Solana ecosystem tokens have experienced a broad surge, with the SOL price hitting a new high for the month.

Industry experts predict that the Solana Spot ETF is expected to be approved within the next 3 to 5 weeks, potentially as early as July. This is earlier than the market's previous expectation of the end of the year. Bloomberg ETF analysts indicate that the SEC may process the applications for Solana and stake ETFs earlier than originally planned.

Solana has met the key prerequisites for approval. In March of this year, Volatility Shares launched two Solana futures ETFs, making it the first L1 public chain project to receive approval for a futures ETF in the U.S. following Bitcoin and Ethereum. Additionally, the Toronto Stock Exchange in Canada launched four Solana spot ETFs supporting staking functionality in April, which not only demonstrates attraction to institutional investors but also exerts indirect pressure on the SEC at the international regulatory level.

However, although Solana meets most of the conditions for approval of a U.S. Spot ETF, the SEC's previous claim in litigation that SOL is an "unregistered security" has not yet been officially clarified or ruled on, which could pose a potential obstacle.

Overall, the approval process for the Solana Spot ETF is accelerating, and the market remains optimistic about its approval prospects. As the SEC conducts in-depth reviews of key issues such as physical redemption and stake mechanisms, the launch of the Solana ETF may bring new opportunities and challenges to the cryptocurrency asset market.