In a major setback for the entire crypto industry, the US Securities and Exchange Commission (SEC) rejected the filing of several companies for Solana ETF filed by Cboe Global Markets.

The SEC’s decision was reportedly prompted by concerns about Solana’s regulatory status, with the Commission expressing doubts about whether SOL should be classified as “an effect.”

Solana ETF proposals considered ‘dead on arrival’

According to According to Bloomberg ETF expert Eric Balchunas, the Solana ETF applications “never made it past Step 2” in the SEC’s review process, referring to the stage at which the regulator posts 19b-4 filings on its website.

Balchunas argued that the lack of regulatory approval means the Solana ETF proposals have effectively been deemed “DOA,” or “dead on arrival.” The expert claimed that the fillings now “have a snowball effect on approval” unless there is a significant change in the Commission’s leadership.

The SEC’s concerns about Solana’s status as a security appear to have been communicated directly to potential ETF issuers, resulting in Cboe withdrawing the relevant notice. 19b-4 forms earlier this month from her website.

James Seyffart, Balchunas’ colleague and ETF expert, noticed that the SEC “is actively pursuing this argument in court and elsewhere” regarding the classification of certain cryptocurrencies, demonstrating the discrepancy between SOL’s classification as a security and Ethereum (ETH) as a non-securities.

The story doesn’t end there, though. While the Cboe filings have been withdrawn, the S-1 registration statement for VanEck’s Solana ETF remains active on the SEC’s EDGAR system.

VanEck’s bid to classify SOL as a commodity

Matthew Sigel, Head of Digital Assets Research at VanEck, mentioned that the company believes SOL should be treated as a commodity, just like Bitcoin (BTC) and Ethereum, based on the progress of cryptocurrency decentralization.

Sigel pointed to several factors supporting Solana’s status as a commodity, including a significant reduction in the concentration of SOL holdings among the top 100 addresses and the growing size of the network. validator are spread across 41 countries and have more than 300 data centers.

Additionally, Siegel highlighted the upcoming Firedancer client for the Solana blockchain developed by the troubleshooting group Crypto Jumpwhich is expected to further strengthen Solana’s decentralization, making it harder for a single entity to dominate the blockchain. Siegel concluded:

This decentralized infrastructure, combined with SOL’s utility and economic role, aligns closely with digital commodities like BTC and ETH. We remain committed to advocating this position with the appropriate regulators together with our exchange partners.

What is certain is that the debate over Solana’s regulatory classification underscores the ongoing obstacles the Commission has erected in recent years as the industry seeks greater institutional acceptance and adoption of crypto-based investment products outside of the two largest cryptocurrencies on the market.

With the SEC taking a firm stance on the issue, the path forward for Solana ETFs remains uncertain. However, VanEck appears determined to continue defending his stance on the commodity-like nature of the cryptocurrency.

At the time of writing, SOL was trading at $142, a small change from Monday’s opening price.

Main image of DALL-E, chart from TradingView.com