As spot crypto exchange-traded funds (ETFs) inflows hit millions, asset managers plan to expose more investors to digital assets. An ETF allows the investor to profit from crypto without making a direct investment.
The ETFs are tied to various classes of assets, such as commodities, bonds, equity, and crypto. The common crypto ETFs are tied to significant coins such as Bitcoin and Ethereum.
This article will discuss a Solana ETF, its operation, viability, and factors to consider when investing in this asset.
What is Solana ETF?
The Solana ETF is tied to the fifth largest crypto asset by market capitalization SOL. This asset exposes the investor to Solana even without making a direct investment.
Gaining exposure to Solana allows the investors to tap into the endless benefits of this network. Such benefits include fast, convenient, and reliable transactions at lower fees. Unlike Ethereum, Solana has distinctive features that streamline the transaction verification process. The network is supported by proof of history (PoH) and proof of stake (PoS), enabling Solana to complete 2,600 transactions per second. From the numerous benefits, investors will gain exposure to the fast and effective blockchain network once the US authority approves the Solana ETFs.
How Does Solana Network Operate?
As investors explore different investment options, Solana ETF offers users viable opportunities. To invest in Solana ETFs, the investors must create an account at a registered brokerage company such as eTrade.At the account creation stage, the user should include a preferred payment method to facilitate the buying and selling of assets. On the brokerage platform, the user should select and invest in his preferred crypto ETF. Guided by the portfolio manager, the investor is advised on the suitable ETF. Portfolio managers are professionals who offer investment solutions and assist in managing the investor’s assets at a fee. This implies that when investing in Solana ETF, the investor will incur management and transaction fees.
Exploring the Alternative Options to Invest in Solana
Alternatively, the investors planning to profit from Solana ETF should consider buying SOL tokens directly from wealth managers such as Grayscale. Recently, the asset manager introduced the Grayscale Solana Trust (GSOL) to allow investors to invest in Solana ETF and monitor the price movement of SOL tokens. However, the GSOL can only be accessed by accredited customers who qualify for specific wealth tiers on Grayscale. This shows that the Solana ETFs could only be accessed by particular individuals.
Factors to Consider when Investing in Solana ETFs
Driven by the desire to gain financial freedom, there are factors to consider before investing in Solana ETFs. Recently, the regulators have extended their regulatory action to the crypto industry to ensure compliance with the law. In this case, the investors should assess whether the Solana ETF conforms to the existing law before making the initial investment. The Solana ETF has faced a tide of criticism from renowned blockchain analysts, including Eric Balchuna. The analyst claimed that the US Securities and Exchange Commission (SEC) disregarded the Solana ETF. The delays in approving the Solana ETF forced potential asset managers to withdraw their applications. This implies that the SEC might be reluctant to endorse the spot Solana exchange funds like the Bitcoin and Ethereum ETFs.
Future of Solana ETFs
Despite the speculations, market critics expect the SEC to approve the spot Solana ETFs by March next year. Others predict that if the Republican presidential candidate Donald Trump wins his reelection bid, the SEC will approve pending crypto ETFs. Early this year, the head of research at VanEck, Matthew Sigel, predicted that the SEC would approve SOL as a commodity since it resembles crypto listed as commodities. The VanEck team was among the first asset managers to file for the Solana ETF. Other asset managers seeking to issue Solana ETFs included 21Shares.
Conclusion
The above article elaborates more on what Solana ETF is and how it functions. The Solana ETF exposes retail and institutional clients to Solana even without making direct investments. Investors can invest in Solana ETF through brokerage firms or Grayscale Solana Trust (GSOL). However, before investing in crypto, the investor should ensure that it is authorized to buy and sell Solana ETF.
