SEC Approves First Solana Staking ETF by REX Shares and Osprey Funds

The U.S. Securities and Exchange Commission (SEC) has cleared the way for the first Solana staking exchange-traded fund (ETF) by REX Shares and Osprey Funds. On Friday, the SEC informed the firms that it had “no further comments” on their Solana staking ETF filing, a phrase industry watchers often interpret as an implicit greenlight. This development follows a similar regulatory process that preceded the launch of spot bitcoin ETFs from major financial institutions.

The ETF, officially titled the REX-Osprey Solana and Staking ETF, is set to begin trading on Wednesday, July 2. This product will be the first U.S. ETF to offer investors exposure to Solana’s price movements alongside native staking rewards. Unlike traditional crypto trusts, this ETF is structured under the Investment Company Act of 1940 using a C-corporation format. This structure allows staking income to flow through to investors without triggering regulatory red flags around yield, taxation, or custody.

The SEC's approval of this unique structure is a significant development. Previously, staking rewards had proven incompatible with trust-based fund models, which couldn’t easily distribute variable staking yields. The SEC had asked REX and Osprey to delay the effective date of their registration statements on May 30, citing unresolved concerns over whether the proposed fund structures met the definition of an “investment company” under the 1940 Act. However, the SEC’s silence on the C-corp workaround now appears to validate it as a compliant solution.

This ETF dramatically lowers the barrier for traditional investors to gain passive Solana exposure plus staking yields using the same brokerage account they use for stocks or index funds. Until now, access to staking meant handing tokens over to a crypto exchange or configuring your own validator setup. This development is precedent-setting and could pave the way for more creative investment products in the future. Several Ethereum-staking ETFs are queued behind this one, and Solana’s approval now offers them a roadmap, though Ethereum’s staking mechanics will add complexity.

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

The SEC's approval of the unique C-corporation business structure used by REX Shares suggests that the regulator is becoming more comfortable with innovative ETF structures. This could open the door to a wider range of investment options for investors. The launch of the Solana staking ETF is part of a broader trend of increasing acceptance and adoption of cryptocurrencies in the mainstream investment landscape. As more investors seek exposure to digital assets, the demand for regulated and convenient investment vehicles is likely to continue to grow. The Solana staking ETF represents an important step forward in this trend, providing investors with a new way to gain exposure to one of the most promising cryptocurrencies in the market.