SEC Halts REX-Osprey's Staking Ethereum and Solana ETF Launch

The U.S. Securities and Exchange Commission (SEC) has cast significant doubt on the proposed launch of staking Ethereum and Solana Exchange-Traded Funds (ETFs) by REX-Osprey. Despite earlier indications that staking might be exempt from securities rules, a recent letter from the SEC suggests these specific ETF filings may be improperly structured and misleading to investors, potentially delaying their anticipated June 2025 debut.

SEC Raises Concerns Over REX-Osprey Staking ETFs

REX-Osprey's ambitious plan to launch staking-enabled Ethereum and Solana ETFs has hit a major snag. The SEC reportedly sent a letter to REXShares, the firm behind the ETFs, stating that the proposed funds do not meet the legal definition of an "investment company," a crucial requirement for ETFs to trade on the stock market. The agency also indicated that the registration forms might be "improperly filed" and contain "potentially misleading" information, which could confuse investors.

• The SEC's primary concern revolves around Rule 6c-11, also known as "The ETF Rule," which allows ETFs to launch quickly without a lengthy approval process. The SEC believes these staking ETFs do not qualify under this rule.

• REX-Osprey had initially aimed for a June 2025 launch, with the expectation that the prospectus would become effective immediately upon filing.

• Greg Collett, General Counsel at REX Financial, stated that the firm is prepared to work with the SEC to address the investment company question before proceeding with the launch.

Staking Clarity and ETF Implications

Just days before the SEC's latest intervention, the agency's Division of Corporation Finance issued guidance clarifying that common forms of crypto staking do not fall under securities laws. This guidance, issued on May 29, 2025, suggested that participants in staking activities, including self-staking, delegated staking, custodial, and non-custodial forms, are not required to register these actions with the financial regulator.

• This earlier clarity was seen as a significant step towards integrating staking into crypto ETFs, potentially unlocking new revenue streams for investors.

• SEC Commissioner Hester Peirce supported the decision, emphasizing staking's role in proof-of-stake systems.

• However, Commissioner Caroline Crenshaw criticized the staff's interpretation, arguing it overlooked the Howey Test for identifying securities.

Unique Structure and Market Context

REX Shares had filed an effective prospectus for the Solana and Ethereum staking ETFs using a unique C-corporation structure, aiming to bypass conventional ETF rules. These funds, structured as 40-Act funds, intended to stake at least 50% of their ETH and SOL holdings and distribute staking rewards to investors.

• Bloomberg ETF analyst James Seyffart highlighted the unique C-corporation structure as a "clever legal and regulatory workaround.

• The absence of staking capabilities in earlier Ether ETFs had drawn criticism from industry executives, who viewed staking as essential to mirroring crypto's true yield potential.

• The SEC's current stance on REX-Osprey's filings underscores the ongoing regulatory challenges and uncertainties faced by crypto ETFs in the U.S. market, despite growing institutional interest and recent positive developments for spot Ethereum ETFs.

Sources

• SEC ruling eases path for Ethereum staking in ETFs, CryptoSlate.

• Solana and Ethereum Staking ETFs to Launch in June 2025 Fact Check, The Crypto Times.

• REX Shares Files Effective Prospectus For Solana, Ethereum Staking ETFs, TronWeekly.

• Solana, Ethereum Staking ETFs Hit Roadblock with New SEC Letter, The Crypto Times.

• ETH Price Recovery to $3,000 Soon Amid Staking Push for Ethereum ETFs, Coinspeaker.