Key Developments:
- First-ever applications for cryptocurrency staking ETFs
- C Corporation structure to bypass 19b-4 process
- SEC expresses concerns about ETF definition compliance
- 80% of funds in underlying assets, 50% for staking
- Staking rewards distributed to shareholders
- Custodian: Anchorage Digital
🏛️ Revolutionary Filings Face Regulatory Hurdles
REX Shares and Osprey Funds have filed papers with the U.S. Securities and Exchange Commission (SEC) to register two “staking” exchange-traded funds (ETFs) based on Solana and Ethereum. The regulator, in turn, has expressed doubts about whether these products comply with current rules.
As noted by Bloomberg Intelligence expert James Seyffart, both funds are structured as C Corporations, which is rare for ETFs in general. This also distinguishes the application from other spot cryptocurrency funds, both under consideration and approved.
💰 Innovative Staking Structure
According to the documents, both products will:
- Invest at least 80% of funds in underlying assets (Ethereum and Solana)
- Lock up at least 50% of these for staking yield generation
- Distribute proceeds among fund shareholders
“All of this, assuming they launch in the near future, is a bunch of clever legal and regulatory workarounds to get these products to market” — Seyffart believes.
🏦 Anchorage Digital Partnership
Anchorage Digital will serve as custodian. Nathan McCauley confirmed this partnership:
“We are breaking new ground with REX Shares, providing federally regulated custody and staking support for the first-ever crypto staking ETFs. As home to the only federally chartered bank approved for staking, Anchorage Digital is proud to be the qualified custodian of choice for ETF issuers”
⚖️ Regulatory Complications
19b-4 Bypass Strategy: Defining the ETFs as C Corporations allows avoiding the laborious registration process through 19b-4 rule changes, but creates new complexities.
SEC Response: Shortly after filing, the SEC responded with an open letter stating that the funds may not meet the definition of an investment company.
Seyffart assessed this as:
“Essentially, the SEC seems to be saying that the clever legal and regulatory moves used to push this thing through actually resulted in the fund not complying with rule 6c-11”
💼 Issuer Response
Greg Collett, Chief Legal Officer of REX Financial, responded to the SEC letter:
“We believe we can satisfy the SEC’s requirements on the definitional issue, and we do not intend to launch the funds until we do”
📅 Timeline and Context
Launch Plans:
- Originally expected to hit the market in mid-June 2025
- SEC asked counterparties to delay the effectiveness of the filing
Market Context:
- SEC has not yet approved even spot Solana ETFs without staking
- Some Solana ETF applications have been accepted for review
- Seyffart remains confident that staking in ETFs will be approved in the foreseeable future
Bottom Line: While REX Shares and Osprey Funds attempt to pioneer cryptocurrency staking ETFs through innovative C Corporation structures, SEC concerns about regulatory compliance may delay these groundbreaking products that would distribute staking rewards directly to shareholders.