REX Shares Plans Ethereum and Solana ETFs That May Navigate New SEC Staking Guidelines

• REX Shares has filed with the SEC to launch Ethereum and Solana ETFs that will stake a portion of their holdings.

• The firm used a rare C-corp structure that bypasses the traditional regulatory hurdles tied to crypto ETFs.

• The move comes just after the SEC clarified that most staking models don’t automatically qualify as securities.

REX Shares has received SEC approval to launch Ethereum and Solana ETFs that stake assets, potentially reshaping crypto investments in the market.

REX’s New ETF Filings to Test SEC’s Stance on Staking

According to the SEC filing, these ETFs will hold the underlying crypto assets and stake a portion of them. Each fund plans to invest at least 80% of its assets in either Ethereum or Solana. At least 50% of those holdings will be staked to earn on-chain rewards, which investors will receive as dividend income.

Bloomberg ETF analyst Eric Balchunas highlighted the filing’s significance, noting that it could lead to the launch of the first spot Solana ETF, as current offerings only track Solana futures. He added that REX leveraged the Investment Company Act of 1940 (40 Act) to fast-track the listing. This allows the firm to bypass the longer and more cumbersome process tied to the Securities Act of 1933 (33 Act).

“First-ever staked Ether and Solana ETFs could be launching soon. REX filing went effective (meaning launch likely in near-term). This is the benefit of using 40 Act, it’s faster track to market but more work/boxes,” Balchunas tweeted.

Moreover, these funds will operate as C corporations rather than follow the traditional structure of regulated investment companies (RICs). This structure provides specific tax advantages, particularly for staking-related activities.

James Seyffart, another Bloomberg ETF analyst, called the move a “clever legal and regulatory workaround” to bring staking-based ETFs to market. “These ETFs are structured as c-corps which is very rare in the ETF world,” he stated.

However, he cautioned that the long-term viability of this approach remains uncertain. This is because more efficient structures, such as grantor trusts, could eventually replace C-corp ETFs. “There might be more efficient vehicles/structures for this type of exposure that come to market in the future.”

Meanwhile, market observers noted that the filing comes shortly after the SEC issued updated guidance on crypto staking. On Thursday, the financial regulator clarified that staking models do not automatically qualify as securities. SEC Commissioner Hester Peirce commented, “The Division of Corporation Finance clarified its view that certain proof-of-stake blockchain protocol ‘staking’ activities are not securities transactions within the scope of the federal securities laws.”

Industry experts like Nate Geraci of the ETF Store believe this regulatory clarity could open the door for new crypto investment products. ETF issuers may now offer direct exposure to yield-generating digital assets through a familiar financial wrapper.

Conclusion

The approval of REX’s Ethereum and Solana ETFs marks a potentially pivotal moment in the cryptocurrency investment landscape. As regulatory frameworks evolve, these innovative products could pave the way for broader adoption of staking-based investment strategies. However, the sustainability of the C-corp structure and the continuous regulatory scrutiny will shape the future of these ETFs.