On Thursday, June 27, funding agency VanEck made a daring transfer by submitting for the spot Solana ETF with the U.S. Securities and Exchange Commission (SEC). While a number of market contributors have began predicting the timeline for the approval, VanEck’s submitting has some necessary particulars that point out the dangers concerned.
Spot Solana ETF Faces Risk of Concentrated SOL Ownership
Unlike Bitcoin and Ethereum VanEck’s proposal of spot Solana ETF is exclusive since there aren’t any Solana futures buying and selling within the US to accompany it. Besides, not like different ETF purposes, VanEck’s submitting additionally lists a selected threat of concentrated possession of SOL tokens.
VanEck’s submitting notes that by November 2023, the 100 largest Solana wallets held almost one-third of all of the SOL in circulation. “As a result of this concentration of ownership, large sales or distributions by such holders could have an adverse effect on the market price,” noted VanEck.
Token decentralization is of utmost significance to traders and regulators. Thus, this concentrated possession of Solana may not go effectively with the SEC and may very well be a roadblock within the approval of the VanEck Solana ETF.
Earlier this 12 months whereas approving the spot Bitcoin ETF, SEC Commissioner Caroline Crenshaw additionally expressed comparable concern about possession in Bitcoin, explaining why she dissented from the approval.
Around 16% of all Bitcoin in circulation is held by the highest 107 wallets, which is about half the focus seen in Solana. Similarly, the highest 100 Ethereum wallets have 19% of the ETH provide.
However, Matthew Sigel, VanEck’s head of digital property analysis has dismissed the considerations stating that the Solana blockchain community itself is decentralized.
Also Read: Will Solana and Ether Outshine Bitcoin in the Near Term Amid ETF Hype?
Another Major Risk With Solana
VanEck has additionally recognized one other particular associated to Solana, associated to its distinctive Proof of History consensus mechanism. Although the Proof of History permits Solana to course of transactions sooner than different blockchains like Ethereum, it has additionally been sufferer to a number of hours of lengthy community outages due to points with PoH in recent times. The SEC may take this into consideration whereas deciding on spot Solana ETF approval.
Well, it appears that evidently contributors have determined to look previous these points as of now. Soon after the information of the submitting, the Solana price surged in double digits rallying all the best way to $150. Currently, the SOL value continues to maintain nearer to these ranges.
Also learn: Wall Street Embraces Altcoins With Solana ETF
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