CBOE files for Fidelity Solana Fund

Fidelity has become the latest investment company to start the procedure for a Solana ETF. The CBOE has filed a form for the fund on behalf of Fidelity, starting the approval procedure. 

Fidelity Investments, through CBOE, filed a 19b-4 application on Tuesday to launch a Solana ETF on CBOE BZX. The 19b-4 form is only the earliest stage of the procedure, still awaiting a prospectus with details on the fund’s structure. 

The CBOE BZX is a subsidiary of the CBOE Group. The filing marks yet another step towards bringing a spot Solana ETF to the US market. The fund will carry SOL, cash, and cash equivalents to balance the inherent volatility of crypto assets.

The fund will be redeemed both in cash and in-kind. The shares issued will be redeemed either for the dollar amount of underlying assets or through Solana transactions to destination wallets. 

The in-kind settlement through crypto transactions differentiates the Fidelity ETF, as most other ETFs are settled in cash. The ability to deposit SOL to the fund will work as a bridge for crypto traders and holders who want to be exposed to the liquidity on CBOE. The underlying SOL can then be freed up and moved into the crypto market. Large-scale SOL owners will thus be able to create baskets of shares directly and use CBOE for their SOL trades.

The new ETF was registered as ‘Fidelity Solana Fund’, after a recent filing by the CSC Delaware Trust Company. The filing to register the fund’s name was considered a signal that a full ETF process would start soon. 

Fidelity, with $4.9T in assets under management, has joined the growing list of Solana ETF filings. Another active preliminary filing came from Canary Capital in February. Currently, Volatility Shares LLC holds one of the few live Solana-based products that specifically track SOL futures. 

Other filings still in review and under discussion include Franklin Templeton, Grayscale, Canary Capital, and VanEck. The fund process takes a long time, and may have a limited bullish effect on the SOL price. 

Fidelity already offers Bitcoin and Ethereum-based ETFs , available through existing brokerage accounts. Solana’s position as a blue chip token with high liquidity puts it as the next probable candidate for a new series of ETFs. The new Solana fund is significant, bringing a large-scale player capable of tapping external liquidity for SOL.

Following the filing news, SOL recovered to $143.97. The news of Fidelity’s filing was considered a potential trigger for a new upward move for SOL. 

The recent filing expands the overall process of ETF filings. The probability of success varies, as multiple firms filed for XRP, Dogecoin (DOGE), and even Pudgy Penguins (PENGU).

CBOE filing points to sufficient SOL volumes to warrant an ETF

The filing for the Solana ETF focused on the coin’s potential to generate volumes and interest. The CBOE pointed out that Solana’s high volumes warranted ongoing trading interest and more secure, fraud-proof products. 

“Over the past several years, U.S. investor exposure to SOL, through over-thecounter funds that invest in SOL (“OTC SOL Funds”) and digital asset trading platforms, has grown into billions of dollars with a fully diluted market cap averaging greater than $90 billion over the last 180 days,” stated the CBOE in the SEC filing. 

The CBOE claimed SOL ownership was distributed enough to avoid direct market manipulation. The main argument was that SOL was already spread to most crypto trading platforms and was less susceptible to manipulation. 

SOL still mostly serves as a utility token for liquidity pairs and DEX trading. The asset is also used for passive staking and lending. SOL has multiple early whales, but has so far shown significant stability, while speculation mostly affects Solana-based tokens and memes. CBOE claims SOL is a better choice for an ETF compared to other recent filings.

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