ARK 21Shares file for a spot Solana ETF – but there’s a catch

ARK Invest and 21Shares have officially filed for a spot Solana ETF. This move aims to make Solana more accessible to investors through traditional markets. However, the filing comes with a major caveat.

If SOL is eventually deemed a security and the sponsors choose not to comply with the necessary regulatory requirements, the ETF will be terminated.

This condition makes the application uncertain as it relies heavily on future regulatory decisions, and the SEC doesn’t have the best track record when it comes to crypto.

The filing follows a similar move by VanEck, showcasing a growing interest in Solana-based investment products following the approval of Ether and BTC’s.

According to the court filing, the ETF will track the performance of Solana, adjusted for the trust’s expenses and liabilities. The ETF shares will trade on the Cboe BZX Exchange.

“The primary objective is to provide a convenient and cost-effective way for investors to gain exposure to Solana without directly purchasing the cryptocurrency.”

ARK 21Shares

21Shares US LLC will sponsor the trust. CSC Delaware Trust Company will serve as the trustee, and Coinbase Custody Trust Company, LLC will be the custodian, holding all SOL on behalf of the trust.

How the Solana spot ETF will work

The trust will not actively buy or sell Solana, except in connection with the creation and redemption of shares. It will rely on authorized participants to handle these transactions.

Authorized participants will buy shares by depositing cash into the trust’s account. This cash will then be used to purchase Solana, which will be held by Coinbase.

When shares are redeemed, the Solana will be sold, and the cash proceeds will be returned to the authorized participants. As for the aforementioned caveat, the filing includes several checkboxes indicating the status of the securities being registered.

It confirms that the securities will be offered on a continuous basis under Rule 415 of the Securities Act of 1933. However, it does not involve additional securities under Rule 462(b) or post-effective amendments under Rules 462(c) or 462(d).

The trust’s registration statement will remain effective until further notice or until the Securities and Exchange Commission (SEC) determines otherwise.

This flexibility allows the trust to delay its effective date if necessary, giving it time to adjust to any changes in regulations ahead of the Presidential election.

The filing also classifies the registrant as a non-accelerated filer, a smaller reporting company, and an emerging growth company.

This classification allows the trust to take advantage of reduced reporting requirements and extended transition periods for new or revised financial accounting standards.

Jai Hamid