REX Shares Files for Ethereum Solana ETFs Using C-Corp Structure

REX Shares has filed a prospectus to list two exchange-traded funds (ETFs) that will hold and stake Ethereum (ETH) and Solana (SOL). The filing, made on May 30, introduces a C-corporation structure, a rare approach in the ETF industry, to bypass the customary 19b-4 review process. This move comes as the Securities and Exchange Commission (SEC) has shown signs of softening its stance on staking activities.

The ETFs will be listed on Nasdaq under the Investment Company Act of 1940. Each fund will own a wholly owned Cayman Islands subsidiary that will purchase spot Ethereum and Solana and participate in protocol staking to earn native rewards. REX Advisers will charge a 0.75% management fee and cover ordinary operating costs, while the C-corp vehicle will accrue current and deferred US income tax, bringing estimated first-year expenses to 1.28% of assets.

According to an analyst, the C-corp wrapper, more commonly used in master-limited-partnership funds, appears to have provided a way to gain some level of approval from the SEC for staking revenue inside a registered ETF. This structure allows the ETFs to avoid the 19b-4 filings that have delayed spot Bitcoin ETFs and blocked traditional grantor-trust vehicles from staking.

The filing follows a clarification from the SEC on staking activities. The SEC announced that protocol staking, whether self-directed, delegated, custodial, or pooled, does not constitute a securities transaction under federal law. This clarification removes a central legal question that has clouded ETF staking proposals, opening the door for fund issuers to add yield to their proof-of-stake holdings. However, the SEC cautioned that ancillary services such as slashing protection or early-withdrawal features still require a case-by-case analysis.

Market observers view this guidance as an opportunity for fund issuers to innovate and bring new products to market. The use of a C-corp structure in this context is seen as a clever legal and regulatory workaround, allowing REX Shares to potentially launch these ETFs in the near future. If seed shares clear the Depository Trust Company and Nasdaq completes symbol reservation, trading could start within the next few weeks.