REX Financial and Osprey Funds Clear SEC Hurdle for First Staked ETH and SOL ETFs

Investment managers REX Financial and Osprey Funds are on the verge of introducing the first staked Ethereum (ETH) and Solana (SOL) ETFs for American investors, following a significant development in their regulatory process. The US Securities and Exchange Commission (SEC) has indicated that it has no further comments on the filings, suggesting that the regulatory hurdles are being cleared. This development was highlighted by Eric Balchunas, a senior ETF analyst, who noted that the SEC's response is a strong indicator that the ETFs are ready for launch.

REX Shares and Osprey Funds submitted their proposals to the SEC in May, outlining ETF structures that would allow the funds to hold and stake the two crypto assets, distributing stake rewards to shareholders. Initially, the SEC had questions about the unique C-corporation business structure of the funds, but these issues appear to have been resolved. The SEC's statement on June 27, which indicated no further comments, along with an updated prospectus from REX, suggests that the launch of these ETFs is imminent.

The ETFs will be listed by Cboe BZX and will trade under the tickers ESK for the ETH staking ETF and SSK for the SOL staking ETF. The funds have also indicated their readiness to roll out these products, with a "Coming Soon" campaign prominently featuring the forthcoming staked ETH and SOL ETFs on their website. This development is significant as it marks the first time staked crypto ETFs will be available to American investors, providing a regulated and convenient way to gain exposure to these cryptocurrencies and their staking rewards.

Nate Geraci, president of ETF Store, observed that the SEC seems open to the creative C-corp business structure used by REX Shares, which was previously contested by the SEC. This structure allows for staking distributions to holders to be taxed within the fund before being distributed as dividends. The unique structure of these ETFs bypasses the typical 19b-4 filing process, making it a rare proposal in the ETF world. This development suggests that the SEC is becoming more comfortable with innovative ETF structures, which could pave the way for more creative investment products in the future.

The launch of these staked crypto ETFs is expected to attract a wide range of investors, from institutional players to individual traders. The ETFs will provide a convenient and regulated way for investors to gain exposure to Ethereum and Solana, as well as their staking rewards. This development is likely to further boost the adoption of these cryptocurrencies, as it offers a more accessible entry point for those who may be hesitant to directly engage with cryptocurrencies. The potential impact of these ETFs on the broader cryptocurrency market is significant, as they could drive further innovation and development within the Ethereum and Solana ecosystems.