SEC Delays Decision on Solana and Litecoin ETFs from Grayscale

This decision adds to the list of delays already made by the SEC against various crypto ETFs. These delays raise big questions about the future of crypto trading

The U.S. Securities and Exchange Commission (SEC) has postponed its decisions on two applications from Grayscale for an exchange-traded fund (ETF). The applications, submitted in June 2023, are for a Solana (SOL) ETF and a Litecoin (LTC) ETF, to be listed on the NYSE Arca exchange.

The SEC’s review period for the two ETFs has now been extended to November 6. In its announcement, the SEC stated that it needs more time to decide whether the two ETFs will meet the investor protection and market transparency standards required by Section 12(b) of the Securities Exchange Act.

This decision comes as no surprise, given the SEC’s history of delaying its rulings on various crypto ETFs. Earlier this year, the SEC pushed back the deadlines for its verdicts on several other Bitcoin ETFs, including those from BlackRock, WisdomTree, and State Street.

The SEC is also in the midst of a public comment period on a proposed rule change by BlackRock for its iShares Bitcoin Trust (ticker: BIT). The comment period began on August 24 and will continue for 21 days.

The proposed rule change would allow for in-kind exchange, where authorized participants could trade shares of the ETF for Bitcoin directly, in addition to the existing cash-out option. It would also enable the ETF to be included in the iShares Core U.S. Aggregate Bond Index.

This proposed change is a significant step, considering that the iShares Bitcoin Trust was the first Bitcoin futures ETF to be approved by the SEC back in 2021. At the time of its approval, the ETF was funded through a combination of cash and Bitcoin, with the majority of the investment being in bitcoin futures contracts.

Earlier this year, BlackRock made a surprise move by applying for the conversion of the iShares Bitcoin Trust into a spot bitcoin ETF, shortly after the SEC rejected an application from WisdomTree for a similar product.

However, in a surprising turn of events, the SEC announced that it would not make a decision by the original November 15 deadline and instead extended the review period.

This decision has implications for Grayscale’s efforts to list the Solana and Litecoin ETFs on the NYSE Arca exchange. It also impacts the SEC’s broader approach to crypto regulation under new chairman Paul Atkins.

Since Atkins assumed his role in June, the SEC has become more engaged with the public and is keen on ensuring transparency in its dealings with financial products linked to digital assets. This signals a shift in regulatory strategy that could have wideranging consequences for the crypto industry.