Beginner

June 22, 2022

Copy

Is a Solana ETF approval possible for 2025?

Introducing Solana ETF & investment potential

The cryptocurrency market has witnessed significant institutional adoption milestones with the approval of Bitcoin spot ETFs in January 2024 and the initial regulatory approvals (19b-4 forms) for Ethereum spot ETFs in May 2024, with actual trading commencing later that year. These developments have naturally sparked speculation about which digital asset might be next in line for regulatory approval for a similar exchange-traded product. Solana, as one of the leading layer-1 blockchain protocols, has emerged as a prominent candidate. This article examines the possibility of a Solana ETF approval in 2025, analysing the regulatory landscape, investment potential, and broader market implications.

A Solana ETF would represent a regulated investment vehicle that tracks the price of SOL, Solana's native cryptocurrency, without requiring investors to directly purchase or store the digital asset. Such an investment product would trade on traditional stock exchanges, offering exposure to Solana's performance through conventional brokerage accounts.

Solana has positioned itself as a high-performance blockchain with several distinctive characteristics that enhance its investment appeal:

Transaction throughput theoretically up to 65,000 transactions per second, with practical sustained rates often in the thousands.
Average transaction cost of less than $0.01 USD.
Sub-second finality time.
Energy-efficient proof-of-stake consensus mechanism.
A vibrant ecosystem spanning DeFi, NFTs, Web3 applications, and DePIN.

The blockchain has demonstrated remarkable resilience following earlier market downturns, with its ecosystem experiencing substantial growth across various metrics. Notable projects within the Solana ecosystem include Jupiter, a leading decentralised exchange aggregator; Pyth Network, a first-party oracle solution; and Helium, which migrated its decentralised wireless network to Solana in 2023.

The investment potential of a Solana ETF extends beyond mere price exposure. It represents institutional validation of Solana's technological proposition and could significantly broaden the investor base beyond crypto-native participants.

Regulatory landscape for crypto ETFs

The path to ETF approval for cryptocurrencies in the United States has been arduous and methodical. The Securities and Exchange Commission (SEC) has established a precedent through its handling of Bitcoin and Ethereum ETF applications that provides insights into potential Solana ETF considerations.

Several key regulatory factors will influence the possibility of a Solana ETF approval:

Classification considerations: The SEC's stance on whether Solana (SOL) constitutes a security remains a significant point of contention. Unlike Bitcoin, which SEC Chair Gensler has referred to as a commodity, Solana operates in a more ambiguous regulatory space. The SEC has previously named SOL as an alleged security in lawsuits against cryptocurrency exchanges, which could complicate ETF approval.
Market maturity requirements: Regulators have historically emphasised market size, liquidity, and resistance to manipulation as prerequisites for ETF approval. Bitcoin's market capitalisation was well over $500 billion USD before its spot ETF approval, while Ethereum's was over $200-$250 billion USD around the time of its spot ETF considerations.
Surveillance-sharing agreements: The SEC has required robust surveillance-sharing agreements, typically involving a significant regulated market like the CME futures market (where applicable), to monitor for market manipulation. This precedent would likely extend to Solana ETF applications.
Custody solutions: Institutional-grade custody infrastructure for Solana would need to satisfy regulatory requirements for security and risk management.

The regulatory timeline for Bitcoin spot ETFs saw approvals approximately 10 years after the first application. The initial approvals for Ethereum spot ETFs (19b-4 forms) followed Bitcoin's spot ETF approval by approximately four months, with trading commencing a bit later after S-1 approvals.

Impact of a Solana ETF on price & adoption

The approval of a Solana ETF would likely catalyse several significant market developments:

Price implications

Short-term price appreciation driven by speculative positioning.
Reduced volatility over time as institutional capital introduces stability.
Narrowing of premiums between spot prices and derivatives markets.

Adoption effects

Enhanced legitimacy in traditional finance circles.
Increased developer activity within the ecosystem.
Greater corporate exploration of Solana-based applications.
Potential acceleration of enterprise blockchain adoption.

Historical precedent from Bitcoin and Ethereum ETF approvals suggests that markets typically price in anticipated approvals months before official announcements. However, the sustained inflows following approval can provide long-term support for asset valuations.

Comparison with Bitcoin & Ethereum ETFs

Understanding the similarities and differences between Solana and its predecessors provides context for assessing approval likelihood.

Market capitalisation (Illustrative, around ETF approval/consideration times)

Bitcoin ETFs: Based on Bitcoin, which had a market cap well over $500 billion USD.
Ethereum ETFs: Based on Ethereum, which had a market cap over $200-$250 billion USD.
Potential Solana ETF: Based on Solana; its market cap as of May 2025 is substantial, often fluctuating in the $80 billion to $150+ billion USD range, varying with market conditions.

Regulatory classification

Bitcoin ETFs: Bitcoin is generally considered a commodity by the SEC Chair.
Ethereum ETFs: Ethereum's classification is still debated, but spot ETFs were approved, potentially influenced by the existence of regulated CME ETH futures.
Potential Solana ETF: SOL has been alleged to be a security by the SEC in past enforcement actions against exchanges.

Market maturity (Years Active by mid-2025)

Bitcoin ETFs: Bitcoin active approximately 16+ years.
Ethereum ETFs: Ethereum active approximately 10 years.
Potential Solana ETF: Solana active approximately 5+ years.

Institutional infrastructure

Bitcoin ETFs: Comprehensive infrastructure was in place.
Ethereum ETFs: Well-developed infrastructure was in place.
Potential Solana ETF: Institutional infrastructure for Solana is developing and growing.

Decentralisation perception

Bitcoin ETFs: High perception of decentralisation for Bitcoin.
Ethereum ETFs: Moderate to high perception of decentralisation for Ethereum.
Potential Solana ETF: Moderate perception of decentralisation for Solana.

The approval sequence established by Bitcoin and Ethereum suggests the SEC may gradually become more familiar with digital assets, starting with the largest and most established. This trajectory could potentially favour Solana as a candidate for subsequent crypto ETF approvals if significant regulatory hurdles, particularly its classification, can be addressed.

Institutional demand for Solana exposure

Institutional interest in Solana has grown substantially, evidenced by:

Increasing volumes on Solana futures contracts listed on major crypto-native exchanges and growth in Solana Exchange Traded Products (ETPs) in Europe and other jurisdictions. Currently, dedicated CME Solana futures are not listed.
Growth in assets under management for Solana investment trusts, such as the Grayscale Solana Trust.
Expansion of Solana-focused venture capital funding.
Development of institutional staking services for Solana.

Major financial institutions including BlackRock, Fidelity, and VanEck have demonstrated appetite for expanding their cryptocurrency offerings beyond Bitcoin and Ethereum. Their experience with existing crypto ETFs creates operational familiarity that could accelerate Solana ETF development if regulatory clarity for SOL emerges.

Institutional demand is further driven by Solana's distinct value proposition as a high-throughput, low-cost blockchain with demonstrated application in decentralised finance, gaming, and payments infrastructure.

Risks & benefits for investors

A Solana ETF would present a unique risk-benefit profile for investors:

Benefits

Elimination of self-custody requirements and associated technical barriers.
Integration with existing portfolio management systems.
Potential for tax-advantaged exposure through retirement accounts in some jurisdictions.
Regulatory protections and standardised disclosures associated with ETF products.

Risks

Potential premium/discount dynamics relative to the net asset value (NAV) of the underlying SOL.
Management fees charged by the ETF issuer, reducing long-term returns.
No direct staking yield passed to investors, unlike holding SOL directly (unless the ETF structure specifically and innovatively incorporates staking, which is complex for spot ETFs).
Exposure limited to price action without direct ecosystem participation rights, such as governance.

For institutional investors, these trade-offs often favour the regulated ETF structure despite its limitations. For retail investors, the convenience factor must be weighed against the reduced functionality and potential lack of yield compared to direct blockchain participation.

Check out our other articles on the Solana blockchain:

Future of Solana ETF approval

Assessing the probability of a Solana ETF approval in 2025 requires consideration of multiple factors:

Regulatory evolution: The SEC's approach to digital asset regulation continues to develop. The classification of SOL as a potential security by the SEC in past actions remains a significant hurdle.
Market conditions: Sustained growth in Solana's market capitalisation, liquidity, and importantly, the development of a regulated SOL futures market (e.g., on the CME, which currently does not exist) would strengthen the case for an ETF by providing a basis for surveillance-sharing agreements.
Institutional preparedness: The readiness of financial institutions to launch and support Solana ETF products, contingent on regulatory green lights.
Political landscape: Changes in regulatory leadership or legislative frameworks concerning digital assets could significantly impact approval timelines.

While precise predictions remain challenging, the pattern established by Bitcoin and Ethereum ETFs suggests that Solana is a logical next candidate for consideration if significant regulatory hurdles, particularly around its classification and the establishment of robust market surveillance mechanisms (often tied to a regulated futures market), can be overcome. The 2025 timeframe allows for some continued market maturation and potential regulatory evolution following the Ethereum ETF precedent.

Conclusion

The possibility of a Solana ETF approval in 2025 represents a plausible, albeit challenging, evolution in cryptocurrency financial products. While regulatory hurdles, especially the SEC's view on SOL's security status and the need for adequate market surveillance mechanisms, remain significant, the precedents established by Bitcoin and Ethereum ETFs provide a potential roadmap. Institutional interest in Solana continues to grow, driven by its technological capabilities and expanding ecosystem. For investors and market participants, monitoring regulatory developments, institutional positioning, and the potential development of a regulated SOL futures market will provide valuable signals regarding approval likelihood. The introduction of a Solana ETF would mark another significant milestone in the integration of blockchain assets into traditional financial infrastructure.