- SEC questions REX-Osprey’s staking ETF proposals.
- Concerns over legal qualifications.
- Spot Solana ETF remains unapproved.
REX-Osprey’s proposed staking ETFs for Ethereum and Solana face scrutiny from the SEC, questioning their legal status as ETFs in the United States on May 31, 2025.
The SEC’s concerns highlight the challenges of aligning staking mechanisms with existing investment company regulations. This scrutiny could influence future regulatory frameworks impacting crypto financial products.
SEC Raises Questions on Legal Status
The SEC has raised questions regarding REX-Osprey’s staking ETF proposals for Ethereum and Solana, citing concerns about their legal status as exchange-traded funds. The regulatory body has challenged REX Shares, the primary entity behind the ETFs, which have filed for REX-Osprey™ ETH + Staking ETF and REX-Osprey™ SOL + Staking ETF. The SEC’s public request on May 31, 2025, highlights its desire for transparency in these investments. As an SEC official noted, “The agency has had several rounds of communication with the issuers… concerning whether these products qualify as investment companies under securities laws.”
Innovative Approach and Potential Impact
REX Shares collaborated with Osprey to create a novel product, using a C-Corporation designation and operating through Cayman Islands subsidiaries. This unique approach aims to bypass traditional ETF regulations. REX Shares intends to address the SEC’s concerns before launching the funds. Greg Collett, REX Financial’s General Counsel, expressed confidence in resolving the regulatory issues, stating, “We think we can satisfy the SEC on the investment company question, and we don’t intend to launch the funds until we do that.”
Market reactions have been closely monitored, as potential approval for these staking ETFs could impact Ethereum and Solana. However, direct market effects remain speculative without SEC approval. Historical precedent shows that no staking ETF offering yield generation has been approved in the U.S., leaving questions about future regulatory outcomes. The insights on cryptocurrency investments and strategies provide further context on these developments.
Broader Implications on Crypto Financial Products
The innovative nature of these funds has drawn significant attention, particularly given that cryptocurrencies traditionally cannot engage in staking activities in spot ETFs. The SEC’s ongoing evaluations and prior disclosure requests indicate regulatory complexities. These movements in the crypto financial product landscape are being watched closely for their broader implications on market dynamics and investment possibilities.
For detailed analysis, the SEC filing document on company structure further elaborates on the underlying mechanics of the proposed ETFs.
