SEC Reportedly Halts Solana ETF Approval Amid Ongoing Security Classification Debate

The U.S. Securities and Exchange Commission (SEC) has halted the approval process for Solana (SOL) spot exchange-traded funds (ETFs), citing ongoing concerns about the crypto’s classification as a security. 

This decision follows recent discussions between the SEC and prospective ETF issuers, which have led to the CBOE BZX Exchange withdrawing its 19b-4 filings related to Solana. Over the weekend, an observer called “Summer” on X noted that the 19b-4 filings had disappeared from the CBOE website and are no longer listed on the Federal Register.

The S-1 statement from 21Shares was also removed from the search results. At press time, only VanEck’s S-1 registration statement for a Solana ETF remained visible in the SEC’s filing system.

According to sources familiar with the matter, the SEC’s apprehension over Solana’s security status could be why CBOE was prompted to refrain from filing the 19b-4 forms with the Federal Register. Notably, these forms, submitted by exchanges on behalf of ETF issuers, are crucial for initiating the approval process, as their withdrawal effectively delays the timeline for any potential decision on the Solana ETFs by the regulator.

However, this shift has not surprised many in the industry, given the SEC’s previous stance in legal filings, such as against Binance and Coinbase, where Solana has been referred to as a potential security.

Meanwhile, halting the approval process has led to speculation that issuers may soon submit revised 19b-4 forms with stronger arguments against the classification of Solana as a security. On Monday, Matthew Siegel, head of digital asset research at VanEck, hinted at the possibility of updated filings, stating that removing certain applications from the CBOE website does not necessarily mean the end for Solana ETFs. He further shared his firm stand on Solana’s classification writing;

“For the record, VanEck believes SOL is a commodity, much like BTC and ETH. 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.”

Meanwhile, various experts and analysts have linked the fate of Solana ETFs to broader political and regulatory shifts. In June, Bloomberg analyst Eric Balchunas noted that Solana ETFs may only stand a chance of approval with a change in the U.S. administration. Recently, Bloomberg Intelligence’s James Seyffart also suggested that approval might not materialize until 2025, depending on future political developments.

Despite these setbacks, the price of SOL has remained relatively stable this week despite a considerable drop of just over 13% in the past month. The crypto-asset was trading at $161 at press time, reflecting a 1.96% increase over the past 24 hours.