Last week, Brazil greenlit the first Solana ETF, sparking discussions about the possibility of approval in the U.S. However, several experts remain skeptical due to concerns surrounding the native token.
A key issue is the significant daily issuance of SOL tokens. Data from the Dune dashboard on August 11 showed an issuance of over 162,503 Solana, valued at approximately $25 million. These tokens are rewards distributed to validators for maintaining the network’s security. Critics argue that this high issuance rate could increase selling pressure, potentially destabilizing the long-term value of the asset.
One outspoken critic, known as smartestmoney.eth, questioned the market demand for Solana given its high issuance rate.
– Who will be the next marginal buyer of SOL when the oversupply of 165,000 daily issuance, with new unlocks coming, overwhelms demand? – he rhetorically asked.
Smartestmoney.eth also pointed to the lack of an ETF as a factor that could limit institutional interest, especially with significant players like Larry Fink turning to Ethereum.
Additionally, there are concerns that Brazil’s approval of the Solana ETF may not actually benefit local investors. A user known as Caramel expressed skepticism on X.
– Brazil has approved the Solana ETF! Solana’s total token supply shows that 20 percent of SOL is still locked. VCs will blindly rob this country of its wealth. March 2025, save the date – wrote the user under the pseudonym Caramel.
He referred to the unlocking schedule of SOL owned by the now-defunct FTX, highlighting a significant unlocking of 7.5 million SOL scheduled for March 2025.
The head of digital assets at BlackRock, Robert Mitchnick, also expressed reservations regarding the feasibility of a Solana ETF. He emphasized the difference in market capitalization and maturity between leading cryptocurrencies and smaller assets like Solana.
– I don’t think we will see a long list of crypto ETFs. If you think about Bitcoin, it represents about 55 percent of market capitalization today. Ethereum is at 18 percent. The next likely asset for investment is around 3 percent. It simply isn’t close to that threshold or maturity record, liquidity, etc. – said Mitchnick.
Historically, Solana has experienced several serious outage incidents, and even the entire blockchain network has reversed transactions or been unavailable for more than 24 hours. SOL issuers may need to prove that the blockchain is mature and stable enough, and that the likelihood of similar incidents is low enough for investors to accept it to better protect the rights and interests of investors.
Despite these hurdles, a degree of optimism remains in the industry. Asset managers such as VanEck and 21Shares have already applied for a Solana ETF in the U.S.
The deadline for a decision by the U.S. Securities and Exchange Commission is mid-March 2025. This indicates that while there are significant challenges, the door for a Solana ETF is not completely closed.
