Solana (SOL) Reaches a Pivotal Moment with the Launch of Futures ETFs

Solana (SOL) is experiencing a pivotal moment with the launch of the first-ever Solana futures exchange-traded funds (ETFs) in the United States by Volatility Shares.

Solana (SOL) is a cryptocurrency that has been making headlines recently, and for good reason. The first-ever Solana futures exchange-traded funds (ETFs) have just been launched by Volatility Shares, a significant development in the U.S. market.

While several asset managers have applied for spot Solana ETFs, none have yet been approved by the Securities and Exchange Commission (SEC). However, the approval of futures ETFs, which began trading on Wednesday, could be seen as a positive sign.

Futures ETFs: A New Chapter in Solana Investing

Two new ETFs from Volatility Shares have hit Nasdaq, offering investors a way to track the movements of Solana futures. These ETFs are also registered with the Depository Trust & Clearing Corporation (DTCC), facilitating seamless trading and settlement.

The first ETF, named Volatility Shares Solana ETF (SOLZ), follows a basket of Solana futures contracts, aiming to provide exposure to the cryptocurrency’s price trends. The second ETF, Volatility Shares 2X Solana ETF (SOLT), is a leveraged ETF, designed to deliver twice the daily return of Solana’s price changes.

Both ETFs have low expense ratios, with SOLZ at 0.95% and SOLT at 1.85%. Moreover, these ETFs derive their Solana price tracking from futures contracts traded on CFTC-regulated exchanges, setting them apart from spot ETFs that hold the underlying asset.

Initial Solana Futures Activity on CME

Meanwhile, trading of Solana futures on the Chicago Mercantile Exchange (CME) has begun, with the initial days showing a notional daily volume of $12.3 million and a close with $7.8 million in open interest.

Although this volume is lower compared to Bitcoin and Ethereum futures at their launch, analysts adjust their expectations based on market capitalization. In that perspective, the activity seems healthy for the beginning stages of the futures market.

The launch of futures ETFs might also be linked to the pending approval of spot Solana ETFs by the SEC. Several asset managers, like Franklin Templeton, 21Shares, and VanEck, have filed for such ETFs.

According to Bloomberg ETF analyst Eric Balchunas, the existence of Solana futures ETFs could be a positive sign for spot ETF approval, as it indicates regulatory recognition of Solana as a commodity, which is crucial for SEC approval.

Volatility Shares Secures First-Mover Advantage

In December, Volatility Shares applied for the Solana futures ETFs, displaying a swift strategy to be the first to file. This allowed them to be the first to launch, as confirmed by CEO Justin Young.

With $3 billion in assets under management, Volatility Shares brings an established presence and credibility to the market. The firm had also filed for a “-1x Solana ETF,” but that filing has been put on hold.

The broader regulatory landscape remains uncertain, with the SEC yet to approve any spot Solana ETFs. A key factor is the classification of cryptocurrencies as commodities or securities, which has been a subject of debate.

The launch of futures ETFs suggests recognition of Solana as a commodity, especially since the CME is regulated by the Commodity Futures Trading Commission (CFTC). However, the SEC's perspective on this matter remains to be seen.

Moreover, public comments on the applications and potential enforcement actions by the SEC could influence the approval process for spot and futures ETFs.