Canary Capital Joins Solana ETF Race Despite SEC Hurdles

Canary Capital applied to the US Securities and Exchange Commission (SEC) on October 30 for a spot Solana ETF (exchange-traded fund). It marks another attempt to offer Solana-focused investment opportunities through traditional brokerage channels.

This comes shortly after Canary filed for similar ETFs for XRP and Litecoin, signaling the firm’s pursuit to expand the investment avenues available to cryptocurrency holders.

Canary Capital’s Solana ETF Filing to Broaden Crypto Access

The proposed spot ETF from Canary Capital aims to track SOL’s performance through the CF Solana Index, which provides real-time price tracking, as detailed in its S-1 registration statement. This setup seeks to give investors exposure to Solana’s price movements without the complexities and security concerns of direct cryptocurrency holdings.

If approved, the ETF will enable investors to access the Solana market through a standard brokerage account. Crypto ETFs appeal to investors by offering indirect exposure to digital assets, presenting a simplified, lower-risk alternative. These funds bypass typical crypto-market risks, making them accessible to both institutional and retail investors.

Canary Capital’s application joins a growing list of firms seeking SEC approval for Solana ETFs. This includes filings by VanEck and 21Shares in June, with Franklin Templeton also rumored to be considering a Solana ETF.

Read more: Solana ETF Explained: What It Is and How It Works.

Canary Capital has not disclosed details regarding the proposed ETF’s custodian or ticker symbol. However, the firm’s move into Solana aligns with its stated mission to broaden access to a diverse set of cryptocurrency assets. Founded by Steven McClurg, a former executive at Galaxy Digital, Canary Capital is known for its blend of adaptive foresight and risk-managed strategies in the crypto investment space.

“We founded Canary to lead the way for the next iteration of actively managed and passive crypto-related offerings with a focus on risk management and adaptive, strategic foresight,” McClurg said.

The firm recently indicated optimism about Solana’s market prospects. It noted that the platform’s active address share surpasses that of major networks like Ethereum and Binance Chain.

“Even when accounting for layer 2 chains, Solana’s active address market share is far higher than Ethereum’s and Binance Chain’s,” Canary emphasized.

This metric, according to Canary, indicates a growing user base and suggests long-term sustainability. This is a key selling point for potential investors and a factor that could sway the SEC’s decision.

SOL ETF Approval Road Marred With SEC Challenges

Despite the new entry into the Solana ETF race, analysts are cautious about the likelihood of near-term approval for such funds. Unlike Bitcoin and Ethereum, Solana faces distinct regulatory hurdles that could impact its ETF prospects, fueling skepticism from firms like BlackRock.

Particular concerns about Solana’s level of decentralization have raised questions over its ETF prospects — a criterion the SEC may weigh heavily. Solana’s reliance on fewer validator nodes compared to more decentralized networks like Ethereum adds to the regulator’s apprehensions, as it potentially introduces unique network vulnerabilities and governance issues.

These challenges, coupled with the SEC’s cautious stance on cryptocurrency, suggest continued delays may be likely. Regulatory concerns are dampening short-term market enthusiasm and may further prolong SEC approval for Solana-focused ETFs.

While the US grapples with regulatory deliberation, Brazil has adopted a different approach, recently approving a Solana ETF. This move positions Brazil as a potential testing ground for crypto asset ETFs and sets an example for other markets, as restrictive US regulations continue to hinder the sector’s growth trajectory.

Read more: Solana (SOL) Price Prediction 2024/2025/2030

Nonetheless, Canary Capital’s Solana ETF filing briefly boosted Solana’s market performance. The price initially rose following the announcement, though it later corrected. BeInCrypto data indicates an overall dip of 3.32%, with Solana trading at $175.11 at the time of writing.