Solana, Ethereum Staking ETFs Face Setback After SEC Letter

Asset manager RexShares’ move to become the first to launch the Solana and Ethereum Staking ETFs in the US has hit a roadblock. The US Securities and Exchange Commission (SEC) sent a letter explaining why these funds may not qualify as ETFs.

SEC Replies To RexShares On Solana & Ethereum Staking ETFs

According to a Bloomberg report, the SEC sent a letter to ETF Opportunities Trust, the entity that issues several ETFs, including the ones Rex Shares manages, stating that the staked Solana and Ethereum funds may fail to meet the legal definition of an investment company, which is a requirement for them to list on the stock market.

The Commission said that it was concerned that RexShares improperly filed the registration statements for these funds and that the disclosures in these statements describing them as investment companies may be “potentially misleading.”

As CoinGape reported, the asset manager had chosen an unconventional application model for these Solana and Ethereum staking ‘ETFs,’ which had raised questions on what the SEC’s response will be. Bloomberg analyst James Seyffart explained that the filings were not the typical 19b-4 applications but 40-Act funds with a unique structure.

However, RexShares believes that the Solana and Ethereum staking ETFs qualify as ETFs. Grey Collett, a general counsel at REX Financial, said that they think they can satisfy the Commission on the investment company question and that they don’t intend to launch the funds until they do that.

Interestingly, this development comes just as the SEC ruled that certain proof-of-staking activities are not securities. Based on this, participants in specific protocol staking activities do not need to register transactions with the Commission under the Securities Act.

Experts Give Their Take On This Development

In an X post, Bloomberg analyst Eric Balchunas commented on the situation with RexShares Solana and Ethereum Staking ETFs. He noted that this development feels a bit similar to the $PRIV situation. He highlighted the fact that the asset manager was likely pushing the envelope “hard” in an effort to launch on the market first.

As CoinGape reported, the SEC has so far delayed other traditional applications from asset managers to offer staking services for their respective ETFs, with the latest delay being the one on 21Shares’ Ethereum ETF staking proposal.

According to the Bloomberg report, Seyffart is confident that the more straightforward attempts to allow staking in a US ETF will ultimately be successful. He added that it is a matter of when, not if. However, the Commission is not a fan of the way REXShares tried to push these listings through. In an X post, the analyst said that it will be an interesting saga to watch in the coming days and weeks.