SEC talks with ETF issuers over concerns of Solana being a security preceded Cboe removing 19b-4s: Sources

The U.S. Securities and Exchange Commission had talks with prospective Solana ETF issuers about its concerns over Solana's potential status as a security ahead of the Cboe BZX removing related 19b-4 filings, according to a source familiar with the situation.

Following the discussions, the SEC rejected the 19b-4 forms, according to a different source. As a result they were removed from the exchange's website and not filed to the Federal Register, which would have started the clock on the approval process. Doing so would have placed pressure on the SEC to make decisions relating to the prospective Solana ETFs.

As noticed over the weekend, the 19b-4 filings — which are filed by exchanges on behalf of issuers — no longer show on the Cboe website. They are also not currently on the Federal Register.

To be approved, ETFs require the 19b-4 forms to be approved and the S-1 registration statements to go effective. The S-1 forms, however, don’t put specific deadlines on the SEC.

Two issuers are currently vying for a Solana ETF: 21Shares and VanEck. Both remain on the SEC's filing system EDGAR. VanEck Head of Research Matthew Sigel, says its application remains in play.

Making the case for a Solana ETF

The SEC reaching out with this stance wasn’t a surprise to issuers given the agency had previously called Solana a security in multiple court filings, the source said. Nor was the idea that these applications could see setbacks.

The source said they anticipate there could be new filings or amendments to the 19b-4s in the future — which would attempt to argue the case more strongly that Solana is not a security.

"We are unable to comment on the regulatory process at this time. We remain committed to expanding investor access to cryptocurrencies in the U.S. market and around the world," said Audrey Belloff, head of communications at 21Shares.

Although both Bitcoin and Ethereum ETFs have cleared the necessary regulatory hurdles and started trading, most market watchers had expected the SEC would be even more reluctant to approve the new Solana funds. Nate Geraci, president of investment advisor The ETF Store, suggested on Aug. 17 that Solana ETFs won't have a chance of securing approval under the current Biden Administration.

This was echoed by Bloomberg Intelligence’s ETF expert James Seyffart who said on X that the fund “only has a shot to launch sometime in 2025 if we have a new admin in the White House and SEC. Even then not guaranteed.”

While the SEC has claimed Solana is a security, VanEck has argued the cryptocurrency is a commodity and functions like Bitcoin and Ether.

The SEC declined to comment.

VanEck and the Cboe did not respond immediately to a request for comment.

This article and headline was updated to include information from a second source that the SEC rejected the 19b-4 forms. It was also corrected to say that 21Shares' ETF filing is still searchable on EDGAR.