Grayscale Investments filed with the U.S. Securities and Exchange Commission (SEC) to convert its existing Solana Trust into a spot Solana exchange-traded fund (ETF). If approved, the spot Solana ETF, under the ticker GSOL, would be listed on the New York Stock Exchange (NYSE).

Grayscale’s filing places it in direct competition with other players in the space, including 21Shares, Canary Capital, VanEck, and Bitwise, all of which are vying for SEC approval to launch similar crypto ETFs. 

The Rise of Grayscale's Solana Fund

Grayscale's Solana Trust has already established itself as one of the largest Solana investment products in the market, holding about $134.2 million in assets. According to Grayscale, the Trust controls around 0.1% of all Solana (SOL) tokens in circulation. The filing comes at a time when Solana's price has shown signs of recovery, rising by 4.5% in the last 24 hours, pushing its value up to $237.

In the filing, Grayscale notes that the custodian for the ETF could be Coinbase Custody, while BNY Mellon Asset Servicing would handle the ETF’s management. This structure follows the model Grayscale used for its Bitcoin and Ethereum ETFs.

Earlier this year, Grayscale succeeded in converting its Bitcoin Trust (GBTC) into an ETF, marking the beginning of a new era for crypto-based ETFs. The Bitcoin ETF began trading in January 2024 and currently boasts a net asset value of $20.59 billion. 

Grayscale also launched an Ethereum ETF earlier this year. By Dec. 3, 2024, the Grayscale's Ethereum ETF has $5.34 billion in assets under management.

Solana’s Potential in the ETF Market

While Solana’s market performance has been strong, it faces challenges in gaining the same level of adoption as Bitcoin and Ethereum. The Solana ETF may not immediately capture the same amount of attention or investor interest, but the recent uptick in Solana's price shows there is strong demand for the asset. 

Worth noting, the US SEC is cautious on approving spot crypto ETFs, particularly for altcoins like Solana due to concerns around market manipulation, liquidity, and investor protection. However, according to some experts things might change under Donald Trump's presidency.

While Solana's price experienced a recent pullback after reaching an all-time high of $260, it remains one of the more popular altcoins in the market. The price drop was largely attributed to market rotations, particularly with XRP surpassing Solana in market capitalization.