Investment firm VanEck on Thursday filed for a Solana SOL +4.54% -based exchange-traded fund.

Many experts say the U.S. Securities and Exchange Commission is unlikely to approve the listing, given that it has already declared Solana’s native token is a security in at least two lawsuits.

However, VanEck Head of Digital Assets Research Matt Sigel said it is the right time to try.

“We believe that the regulatory landscape is shifting,” Sigel told The Block in an interview. He pointed to recent bipartisan legislative advancements, such as the passage of the landmark FIT21 market structure bill and how the SEC abruptly changed course and agreed to approve spot ether ETFs to support his position.

VanEck has been on record since last year that it believes the Trump campaign will win reelection, which would likely ease the regulatory burden on financial firms given the former president’s embrace of crypto. However, Sigel said there is a good chance its SOL ETF would be approved regardless of who wins in November.

“There is a good chance [SEC] Chairman Gary Gensler is fired,” Sigel said, whether that’s because of the incoming Trump administration or if he’s named Treasury Secretary under Biden. When asked whether Gensler has done anything right regarding crypto regulation, Sigel replied with a firm “no.”

One of the reasons why pundits are skeptical a Solana ETF might get approved any time soon is because the cryptocurrency hasn't been listed on futures ETFs. For instance, Cube.Exchange CEO Bartosz Lipinski said, “It would be surprising to see the SEC allow such a fund to come to market without futures, as that has seemingly been the path for both BTC and ETH spot ETFs.”

However, Sigel argued this isn't a requirement.

"The futures market requirement is a Gensler psyop,” the lead researcher said.

The SEC has often relied on futures markets to meet its market surveillance requirement to list particular exchange-traded products. Sigel noted that’s hardly the only path, mentioning the information-sharing agreements between spot crypto exchanges and the listing ETF markets pioneered by BlackRock’s IBIT bitcoin ETF.

A strategic move

But it’s more than just an optimistic regulatory outlook that convinced VanEck it’s the right time to try to launch novel crypto-based ETFs — it’s also strategic. He said if the SEC returned to the norm of approving ETF applications as they came in, rather than doing blanket approvals like in January when 10 bitcoin ETFs were approved on the same day, VanEck wanted to be sure they were first. For instance, the firm was also the first to file an Ethereum ETF proposal.

“The department handling the S-1 filings at the SEC is not the same as the division that already approved Cboe, NYSE Arca and Nasdaq’s 19b-4 proposals,” Sigel said about the current slate of Ethereum ETF filings being considered. “They can still do the right thing.”

Moreover, the firm is simply jazzed about Solana. “We like the coin,” Sigel said, referring to the meme popularized by legendary retail trader Keith “Roaring Kitty” Gill. Sigel added that the firm said the network is roughly as decentralized as Ethereum, and if one asset receives ETF approvals so should the other.

“In our due diligence, we found no evidence that there is any one network participant that can control the chain,” he said. Further, Sigel said, the distribution of SOL tokens is unusually fair, as no one entity controls more than 15% of the circulating supply.

The SEC “should not be in the business of picking winners or losers,” he said. 

Courting buyers 

Another consideration: VanEck can expect demand for a Solana fund, Sigel said, given the network’s meteoric growth in recent months. However, it isn’t yet clear whether that is true.

While over the past year, Solana has become one of the most widely used blockchains and a center for developer activity — largely due to the rise of memecoins — it arguably doesn’t yet have the same level of institutional interest as Bitcoin or Ethereum. Galaxy Digital, for instance, recently projected ETH ETFs could see up to $7.5 billion of inflows within the first five months after launch, largely driven by institutions and broker-dealers.

Jacob Martin, of 2 Punks Capital, might disagree. “We are seeing more and more early-stage teams open to or excitedly building on SOL,” the early-stage investor (who doesn’t directly buy public liquid tokens) said.

“The current path may be defined loosely as ‘Launch, gain traction, be sufficiently decentralized, and then hope for an ETF to get further cemented the asset is a commodity,’” Martin said, adding that launching a SOL ETF “could lead the way for teams that are further downstream to find comfort building in an ecosystem."

Likewise, industry advocacy group Digital Future founder and former congressional candidate Michelle Bond suspects there might be more demand for a SOL ETF than expected, given how popular bitcoin ETFs have been.

“There continues to be strong demand for exposure to digital assets as part of a balanced investment portfolio and an ETF would simplify custody and allow Solana exposure to be more seamlessly integrated with a person’s investment portfolio,” Bond said. “It is more than timely for the U.S. to approve [a SOL ETF].”