Jake Simmons
The Chicago Mercantile Exchange (CME) has no plans to list Solana futures, according to information leaked by a source familiar to the situation, via the Twitter account db (@tier10k). This news deals a significant blow to the anticipation around a potential Solana Exchange Traded Fund (ETF) in the US markets.
CME HAS NO PLANS TO OFFER SOLANA FUTURES: PERSON FAMILIAR
Source: DB | Coins: SOL
— db (@tier10k) May 29, 2024
What This Means For The Spot Solana ETF Hopes
Scott Johnsson, a seasoned finance lawyer at Van Buren Capital, commented on the development, emphasizing the regulatory hurdles that Solana faces. He clarified that while a Solana ETF does not require the CME specifically to act as the designated contract market (DCM), any potential market would require a robust framework with a Custody and Security Services Agreement (CSSA) and sufficient liquidity. “ETF doesn’t need to be CME as the DCM that is listing (just one with a CSSA and liquid),” Johnsson noted.
However, the broader context of ongoing enforcement actions against prominent crypto exchanges like Coinbase and Binance by the US Securities and Exchange Commission (SEC) casts a shadow over the feasibility of such an ETF. “No one is going to self-certify SOL as commodity futures so long as Coinbase/Binance enforcements are ongoing. Even if CME (or other DCM) self-certified, the current SEC could and would block,” Johnsson elaborated.
Adding to the complexity, Johnsson remarked on the need for a significant change in the SEC administration or its policies before Solana could realistically progress towards an ETF. “SOL really needs a change in admin to have a shot in the foreseeable future. Or the current SEC reversal goes way further than anyone is expecting. The former seems more likely,” he expressed.
The nuances of the issue led to some confusion among the crypto community. X user Jonny Moe pointed out the focus of the discussion, prompting Johnsson to clarify, “I know, but the point is everyone is focused on this [a futures ETF listed on the CME] as a prerequisite to an [spot] ETF.”
James Seyffart, a Bloomberg ETF analyst, concurred with Johnsson’s views regarding the SEC’s stance, adding a historical perspective: “This SEC isn’t gonna let anyone register Solana futures with the CFTC as ‘Commodities Futures’. They made that mistake with Bitcoin and Ethereum. I seriously doubt this admin does that again. They would very likely push back.”
The SEC has notably named Solana in lawsuits against Binance and Coinbase, categorizing it as a security, which further complicates the asset’s regulatory landscape and its prospects for futures and spot ETF listings in the US.
The leak from the CME dampens any immediate hope for Solana’s inclusion in futures markets and significantly dims the prospects for a spot ETF in the near term. The SOL price remained relatively stable in response to the news, closely aligning with the prevailing market trend. At press time, SOL traded at $163.83.
Featured image from Euronews, chart from TradingView.com