The proposed Solana Fund would supply publicity to SOL staking yields.
3iQ, a veteran digital asset supervisor, has utilized to launch a brand new exchange-traded product (ETP) in Canada.
On June 20, 3iQ introduced it had submitted a prospectus to the Ontario Securities Fee (OSC) to create The Solana Fund, an ETP providing buyers publicity to SOL. If authorised, the product would commerce on Canada’s Toronto Inventory Alternate (TSX) underneath the ticker QSOL.
The fund notably seeks to supply publicity to staking yields generated by the underlying SOL backing the fund’s shares. 3iQ famous that property can be held in chilly storage by a partnership with Tetra and Coinbase.
“We have submitted a preliminary prospectus for The Solana Fund (QSOL) in Canada in relation to an initial public offering,” 3iQ mentioned.
Nonetheless, James Seyffart, a Bloomberg ETF analyst, famous that 3iQ’s proposed ETF includes a closed-end fund. Closed-end funds problem a set variety of shares traded on exchanges, and their costs can diverge from the online asset worth.
“It will be more similar to one of the Grayscale trust products, except Canada’s closed-end funds have mechanisms to prevent the discounts or premiums from getting too extreme,” he mentioned. “3iQ did this with a Bitcoin fund in 2019 before launching ETFs.”
Eric Balchunas, a fellow ETF analyst at Bloomberg, criticized 3iQ for choosing a closed-end design for the fund.“Went from kind of a big deal to almost totally insignificant,” he mentioned.
In April 2020, 3iQ was among the many first to listing a Bitcoin fund and launched a publicly listed Ether Fund in Toronto. They now supply two merchandise, the 3iQ Bitcoin ETF (BTCQ) and the 3iQ Ether Staking ETF (ETHQ) on the TSX, with internet property of roughly $224 million and $48.84 million, respectively, based on 3iQ.
Is Solana a candidate for an ETF?
3iQ’s submitting comes as buyers are speculating as to which cryptocurrency could grow to be the third to underpin a spot exchange-traded fund (ETF).
In contrast to ETFs primarily based on derivatives, spot funds maintain the underlying asset they observe, driving exerting bullish demand on the asset’s provide. Bitcoin grew to become the primary cryptocurrency backing a spot ETF in January, whereas spot Ethereum ETFsare anticipated to enter the market by fall.
Whereas Solana has obtained reward from mainstream asset managers together with Franklin Templeton and Commonplace Chartered, no U.S. agency has pursued plans for a spot Solana ETF so far.
Nonetheless, asset issuers could also be unlikely to use for a spot Solana ETF any time quickly after the U.S. Securities and Alternate Fee (SEC) described SOL as a safety asset in its lawsuits towards Coinbase and Kraken final 12 months. As such, there are slim probabilities that the SEC would greenlight an ETF backed by an asset it believes to comprise an unregistered securities asset.
“SEC isn’t dancing around SOL’s status like they have ETH,” Seyffart tweeted. “Those lawsuits against COIN and Kraken and others flat out say ‘Solana is a security’.”
The SEC additionally famous the existence of regulated futures ETFs monitoring Bitcoin and Ethereum when approving mentioned funds, emphasizing that the futures ETFs’ shares have demonstrated a robust correlation to the property’ corresponding spot market costs.
In a June 16 interview, Arthur Hayes, the co-founder of BitMEX, urged that Dogecoin could supply an unlikely contender within the spot ETF race.
“If you’re thinking about TradFi getting into crypto, they’re going to put an ETF on anything they can,” Hayes mentioned. [DOGE has] a excessive market cap factor, it has been round for some time. It is the unique memecoin… I believe DOGE will get an ETF earlier than the top of the cycle.
Adam Cochrane, a distinguished web3 influencer affiliated with Synthetix, equally speculated that each DOGE and Litecoin (LTC) might be effectively positioned for an ETF launch.
Nonetheless, Seyffart argued {that a} Litecoin ETF would possible endure from poor demand, regardless of LTC exhibiting comparable attributes to Bitcoin and Ethereum.
