Solana News Today: Five Groups Propose Solana ETF with LSTs to SEC

Five prominent entities—Zto Labs, Bitwise, Multicoin Capital, VanEck, and the Solana Policy Institute—have submitted a proposal to the U.S. Securities and Exchange Commission (SEC) for the creation of a spot Solana (SOL) Exchange-Traded Fund (ETF) that incorporates Liquidity Staking Tokens (LSTs) as a staking mechanism. This initiative aims to bridge the gap between traditional finance and decentralized technologies by enabling investors to gain exposure to Solana while still participating in network staking and earning yield [1].

The proposed structure would leverage LSTs, which represent staked SOL tokens and allow investors to retain liquidity while receiving staking rewards. This innovation addresses a key challenge in crypto investing: the illiquidity of staked assets. By using LSTs, the ETF could generate yield, maintain efficient capital use, and simplify operational complexity for issuers, making it potentially more attractive to both institutional and retail investors [1].

The proposal is seen as a significant step in the evolution of crypto ETFs, particularly for proof-of-stake networks like Solana and potentially Ethereum. If approved, the Solana ETF could serve as a model for future products that combine traditional investment structures with the benefits of on-chain participation. It may also accelerate mainstream adoption by providing a regulated vehicle for investors who are hesitant to engage directly with blockchain technology [1].

However, regulatory hurdles remain. The SEC has historically been cautious about approving cryptocurrency ETFs due to concerns around market manipulation, investor protection, and the lack of mature regulatory frameworks. The proposal must demonstrate that the LST mechanism can ensure sufficient market transparency, liquidity, and security to meet these regulatory standards [1].

Market analysts suggest that the SEC’s recent approvals of spot Bitcoin ETFs and legal setbacks in past rejections—such as the Grayscale case—may indicate a shift in regulatory posture. This proposal could test whether the SEC is willing to extend its more accommodating stance to other crypto assets and innovative financial products [1].

The potential approval of a Solana ETF with LSTs could have far-reaching implications. It may increase institutional investment in Solana, enhance the token’s market liquidity, and set a precedent for the development of other proof-of-stake-based crypto ETFs. Additionally, it could contribute to the broader regulatory normalization of staking mechanisms within investment vehicles, influencing future crypto-related legislation [1].

Investors are advised to monitor the SEC’s timeline for reviewing the proposal, the technical details of the LST implementation, and the overall market conditions, as these factors will significantly influence the outcome. The convergence of traditional finance and blockchain innovation in this proposal underscores the maturation of the crypto industry and the increasing integration of decentralized technologies into mainstream financial systems [1].

[1] Pivotal Solana ETF Proposal: Unlocking New Investment Frontiers with LSTs

Source: [https://coinmarketcap.com/community/articles/688b99dc286adf6d7d4812c0/](https://coinmarketcap.com/community/articles/688b99dc286adf6d7d4812c0/)