Apr. 10, 2025
Hello, as a long time market participant in crypto I am recommending that the Solana ETF be postponed and denied at this time. Here are my 11 reasons: 1.A Solana ETF should be delayed until its futures markets are more established. Unlike Bitcoin and Ethereum—both of which had U.S. futures markets operating for years prior to their ETF approvals—Solana only recently began trading on regulated futures platforms. Coinbase Derivatives launched SOL futures on February 19, 2025, and CME Group followed on March 17, 2025. These markets are still in their infancy, and sufficient time should be allowed to assess their stability, liquidity, and regulatory oversight before advancing toward an ETF approval. 2. Solana has been identified by the SEC as an unregistered security in the past, and should remain so until clear regulations are in place.In multiple enforcement actions, the SEC has classified Solana (SOL) as an unregistered security. Without a finalized regulatory framework for digital assets, reclassifying SOL or advancing a Solana ETF would be premature and inconsistent with how other assets have been handled. Proceeding amid this legal uncertainty risks setting a dangerous precedent and could undermine investor protections. 3. The SEC is actively developing a regulatory framework for crypto, and no Solana ETF should be approved until it is complete. The SEC has launched a new initiative to establish clear rules for digital assets, recognizing the need for comprehensive oversight. Granting a Solana ETF before this framework is finalized would be premature and undermine the very process meant to ensure market integrity and investor protection. 4. Solana faces serious centralization risks, making it vulnerable to outages and network instability.Solana's network architecture depends on a relatively small number of high-performance validators and large servers to achieve speed and scalability. While this design allows for fast transaction throughput, it introduces significant centralization risks. Unlike truly decentralized blockchains like Bitcoin and Litecoin—both of which rely on thousands of globally distributed nodes—Solana’s reliance on fewer, more powerful nodes has resulted in repeated network outages and downtime. These technical vulnerabilities raise serious concerns about Solana’s resilience and reliability. Until the network can demonstrate greater decentralization and operational stability, it should not be considered suitable for the institutional exposure and investor expectations that come with an ETF. 5. Sam Bankman-Fried, Alameda Research, and FTX held a large amount of Solana tokens, raising concerns about market manipulation. The concentration of SOL tokens among FTX-linked entities created a clear vulnerability to market manipulation. During the FTX bankruptcy proceedings, millions of SOL were sold at a significant discount to firms like Galaxy Digital, Pantera Capital, and others. Shortly after these sales, the price of Solana surged, raising questions about whether these entities, including those involved in the sale, might have been complicit in efforts to pump the token’s value, benefiting both the FTX bankruptcy estate and themselves at the expense of retail investors. While direct evidence of manipulation is not conclusive, the timing and concentration of these transactions warrant further scrutiny. 6. Pump.fun is the main platform that is allowing for retail to create and launch solana tokens, the majority of these investors are losing money with only a small handful actually seeing profits and value. It's a complete pump and dump scheme with no major utility in these meme coins. With new legal actions and facilitating securities violations the main use case of solana could vanish leaving investors with even more losses. 7. Solana’s centralized architecture allows for low-cost, high-frequency transactions, which can be exploited to artificially fake metrics like user activity or transaction volume. By moving funds between new addresses or engaging in small, frequent transactions, one can create a misleading network activity, potentially deceiving investors about the actual health and adoption of Solana, there are several news outlets that have reported this being a possibility. 8. The Solana foundation faced scrutiny over its token supply transparency. Initially, it reported a circulating supply of about 8.2 million SOL in April 2020, but it was later uncovered that one wallet held over 13 million SOL, suggesting a much higher actual supply. This led to community outcry, followed by the removal of 11.36 million SOL from circulation by the Solana Foundation in May 2020, adjusting the total supply to 488.64 million. Moreover, a class-action lawsuit in July 2022 accused Solana Labs of misleading investors about the token supply, alleging sales of unregistered securities and poor disclosure practices. 9. Solana has experienced multiple outages over the years, sometimes lasting for days. Such instability raises concerns about Solana’s reliability as a decentralized financial asset. A blockchain that frequently halts is a red flag that it is centralized. 10. Both Bitcoin and Ethereum, the only two cryptocurrencies with SEC-approved ETFs, originally started with Proof of Work (PoW). PoW provides fairer and more decentralized token distribution, as mining rewards are earned through computational work rather than being concentrated in the hands of early investors. Solana, on the other hand, is Proof of Stake (PoS), where early holders with large amounts of tokens can essentially rent-seek, compounding their wealth over time ("rich get richer") without meaningful redistribution. 11. On-chain analytics for Solana are still not widely available. Comprehensive and reliable analytics are essential for investors and regulators to assess the health, activity, and integrity of a blockchain network. The lack of transparent, detailed on-chain data can hinder the ability to monitor for suspicious activities, understand network usage, and validate the claims about network performance and adoption.