U.S. Regulators and Crypto ETFs

U.S. regulators recently added filings for a proposed Solana exchange-traded fund (ETF) and a rule change for a product linked to Pudgy Penguins tokens.

The Invesco Galaxy Solana ETF joins eight other funds tracking the performance of the sixth-largest cryptocurrency by market capitalization.

Meanwhile, a 19b-4 request by Cboe awaits approval to allow the Canary PENGU ETF to trade on their exchange.

These filings signal ongoing developments in the increasingly competitive crypto ETF space, particularly after the successful launch of spot Bitcoin and Ethereum funds over the past 18 months, alongside a more favorable political climate for crypto products.

The SEC is currently reviewing more than two dozen applications for altcoin-based ETFs, which include Solana, XRP, Dogecoin, Cardano, Polkadot, and Hedera.

Earlier this month, seven Solana fund issuers submitted amended S-1 forms to clarify terms allowing them to stake the Solana they hold. Staking involves committing tokens to a decentralized network for rewards, which poses regulatory concerns, especially after the SEC delayed decisions on Ethereum ETF staking due to financial and security risks.

Analysts Eric Balchunas and James Seyffart of Bloomberg estimate that Solana, XRP, and Litecoin spot ETFs have a 95% chance of SEC approval by the end of 2025. Meanwhile, Dogecoin, Cardano, Polkadot, Hedera, and Avalanche spot ETF applications have a 90% probability of approval by year-end, bolstered by the previous successes of BTC and ETH ETFs, which attracted $47 billion and $4 billion in net investments, respectively.

The Invesco Galaxy Solana ETF will trade under the QSOL ticker. Galaxy Digital Funds will manage the fund’s transactions, while Coinbase will act as custodian.

Canary Capital, focused on crypto investment, filed for its Pudgy Penguin fund in March, part of several other altcoin ETFs proposed to the SEC.

Currently, Solana, native to the Solana network, is trading at $143, having dropped nearly 1% in the last 24 hours and about 18% in the past month. Despite this, it remains popular among developers due to its speed and efficiency. Conversely, PENGU remains stable, falling 22% over the past month.

Edited by Sebastian Sinclair