Excitement is brewing in the financial markets as the first Ethereum and Solana staking exchange-traded funds (ETFs) are anticipated to debut in the United States within weeks. This development follows a recent filing by ETF provider REX Shares, which has employed innovative regulatory workarounds to navigate the complex landscape of cryptocurrency regulation.
The launch of these staking ETFs is particularly noteworthy given the growing interest in spot Ether (ETH) ETFs since their introduction in July 2024. Many industry insiders assert that these products feel incomplete without the staking component, which allows investors to earn rewards on their holdings.
REX Shares: A Unique Approach
What sets the REX Shares filings apart is their unique structure. According to ETF analyst James Seyffart, these ETFs are classified as C-corporations for tax purposes—an unconventional choice in the ETF space. “Don’t know the launch date, but it could be within the next few weeks,” Seyffart remarked in a recent post on X.
“These ETFs are structured as C-corps, which is very rare in the ETF world,” Seyffart added.
REX Shares outlines in its filing that the fund will incur current and deferred tax expenses as a result of this structure. “Such current or deferred tax liabilities, if any, will be reflected in the Fund’s Net Asset Value,” the filing stated, indicating a level of transparency regarding the financial implications for investors.
Seyffart explained that the proposed Solana (SOL) and Ether staking ETFs are classified as 40-act funds with a novel structure, allowing them to bypass the traditional 19b-4 process for regulatory approval. This move comes on the heels of the SEC delaying Bitwise’s application to add staking to its Ether ETF, a sign that the regulatory landscape remains complex and ever-changing.
Imminent Launches on the Horizon
Analysts are optimistic about the imminent launches of these ETFs. Seyffart mentioned that the funds would gain spot exposure to Ether and Solana “via Cayman subsidiaries,” showcasing a strategy that cleverly navigates legal requirements. “All of this is a bunch of clever legal and regulatory workarounds to get these products to market,” he noted.
ETF Store President Nate Geraci echoed this sentiment, suggesting that REX Shares has effectively executed a “regulatory end-around.” He pointed out that both ETFs aim to stake “at least 50%” of Solana and Ether, marking a significant milestone for crypto investment products.
The anticipation for staking ETFs has been palpable within the industry. Robbie Mitchnick, head of digital assets at BlackRock, referred to their Ether ETF as a “tremendous success,” but he acknowledged that the product is “less perfect” without the staking feature. This viewpoint reflects a broader consensus that staking is a crucial element for maximizing returns on crypto investments.
As these developments unfold, they will undoubtedly shape the future of cryptocurrency investment strategies and regulatory approaches. The arrival of these staking ETFs could represent a major leap forward for mainstream acceptance of digital assets.
