Key Insights:
- Franklin Templeton registers the Franklin Solana Trust in Delaware, signaling plans for a Solana ETF.
- Solana faces $3 Billion in token unlocks over three months, potentially impacting its Solana price.
- Analysts predict a spot Solana ETF could attract $3 Billion to $6 Billion in net assets in its first year.
Solana price has slumped and reached a vital support area, all after displaying stellar performance. Meanwhile, amid the volatility in price, a new development has surfaced in the ETF space.
AUM Franklin Templeton has taken a significant step by registering a trust in Delaware for a proposed spot Solana ETF.
According to a filing with Delaware’s corporate regulator, the “Franklin Solana Trust” was established on February 10 by the CSC Delaware Trust Company.
Which has previously registered crypto trust products for other asset managers, including Bitwise.
In a related development, the SEC has recently acknowledged a filing for a Solana ETF from Canary Capital. Which reflects the increasing interest from financial institutions in SOL-based investment products.
Keep reading to know more.
Franklin Templeton Advances Solana ETF Plans
Franklin Templeton, which has $1.6 Trillion in assets under management, made a significant move by registering the Franklin Solana Trust in Delaware. This underscored its commitment to expanding its crypto offerings amid growing institutional interest in these products.
The filing with Delaware’s corporate regulator also indicates that Franklin Templeton is joining other firms, such as Grayscale and Canary Capital, in seeking SEC approval for spot Solana ETFs.
The investment firm has also submitted an amended S-1 filing to the SEC for its Franklin Templeton Crypto Index ETF. By doing so, it confirms that it is following a similar path taken by other asset managers who have registered crypto trust products in Delaware.
Moreover, to compete for a Solana ETF alongside Grayscale, Bitwise, VanEck, 21Shares, and Canary Capital, Franklin will need to file a Form 19b-4 also with the Securities and Exchange Commission for its proposed ETF.
If approved, the Franklin Solana Trust aims to track the movements of Solana price, currently the fifth-largest cryptocurrency with a market cap of $97 Billion, according to CoinGecko.
Additionally, Franklin’s entry into the Solana ETF race adds momentum to the ongoing developments in ETF technology for altcoins.
While regulatory bodies continue to assess the risks associated with these crypto’s, the final decision on the approval of alt-ETFs remains in their hands.
Solana ETF Applications to Get a Favorable SEC Outlook?
The SEC first approved Bitcoin and Ethereum ETFs in 2024, but it remains cautious regarding other altcoin ETFs.
The agency’s primary concerns include the risks of market manipulation, liquidity challenges, and compliance with securities laws.
However, a more pro-crypto administration in the U.S. could shift the SEC’s stance, particularly following the repeal of SAB 121, which has already facilitated the entry of many financial institutions into the crypto space.
Under this new oversight, the odds for altcoin ETFs have improved significantly. Just a day prior, Bloomberg ETF analysts James Seyffart and Eric Balchunas estimated a 90% chance that the SEC will approve a spot Litecoin ETF by 2025.
They also indicated that the likelihood of a spot Solana ETF being approved before the end of 2025 stands at 70%. Notably, these odds surged following President Donald Trump’s election victory in November.
However, Seyffart cautioned that the SEC will need to clarify Solana’s status as a security before it can be evaluated under a “commodities ETF wrapper.”
SEC Acknowledges Multiple Solana ETF Applications
Furthermore, the SEC is currently reviewing multiple applications for Solana ETFs as firms seek regulatory approval.
In June 2024, VanEck became the first company to file for a Solana ETF, sparking interest from other businesses in launching similar products.
Following VanEck’s initial filing, four additional firms submitted their applications for Solana ETFs to the SEC.
On February 11, the SEC acknowledged the Form 19b-4 filings for spot Solana ETFs submitted by 21Shares, Bitwise, Canary Capital, and VanEck.
Also, the SEC recognized Grayscale’s Solana filing on February 6, a noteworthy development considering that the agency had reportedly rejected several applications under former Chair Gary Gensler in December.
The regulatory body currently classifies Solana as an unregistered security, a designation that poses challenges for its approval.
Moreover, in the previous month, the financial services firm JPMorgan estimated that an approved spot Solana ETF could attract between $3 Billion and $6 Billion in net assets within its first year. This is a prediction that analyst Eric Balchunas described as a fairly “reasonable guess.”
Why Does Solana Look Promising in the Long-Term?
The number of Solana ETF applications is rapidly increasing, highlighting the active interest of institutions seeking exposure to the cryptocurrency.
Despite the current regulatory uncertainties, firms are strategically positioning themselves to gain a competitive edge in the future market.
The recent entry of Franklin Templeton into the Solana ETF race reflects a growing confidence in the long-term potential of the Solana cryptocurrency.
Similarly, many industry experts agree that regulatory approval remains the primary hurdle for launching these ETFs.
The SEC’s cautious approach towards altcoin ETF applications may result in extended review processes, as the regulator exercises restraint with these investment funds.
Nevertheless, companies are diligently preparing for the possibility of SEC authorization for a Solana ETF.
Which demonstrates their commitment to navigating the evolving landscape of cryptocurrency investments.
What Could Happen in Solana Price Ahead?
Recently, Solana price has experienced increased bearish momentum as investors process the news of upcoming $3 Billion token unlocks scheduled over the next three months. This series of unlocks will represent Solana’s largest supply injection since its inception.
Starting this month, the crypto market will see the release of 15.7 million SOL, valued at approximately $3 Billion, over the next three months.
In February alone, more than 3 million SOL will enter circulation, which could exert downward pressure on the Solana price.
Historically, prices tend to decline when demand does not keep pace with the rising circulating supply during token unlocks.
While discussions within the crypto community continue regarding the potential impact of these unlocks, progress is being made on Solana ETF filings.
Also, the SEC has acknowledged several applications for Solana spot ETFs, with asset manager Franklin Templeton expressing interest by submitting its own trust filing.
The growing number of applications for a Solana ETF reflects increasing interest from institutional investors.
Despite the mixed news surrounding the token unlocks, Solana price has remained relatively stable.
SOL faced rejection near the $206 resistance level, which aligns with the upper boundary of a descending channel.
If bearish pressure continues and Solana price continues to be rejected, it may decline toward the channel’s lower boundary.
Conversely, a breakout above the channel’s upper boundary resistance could trigger a significant rally, potentially pushing SOL up by 35% toward the $270 level.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.