Key Takeaways:
The U.S. Securities and Exchange Commission (SEC) is scrutinizing the proposed staked exchange-traded funds (ETFs) for Solana (SOL) and Ether (ETH), raising concerns about their compatibility with established ETF regulations.
The agency pointed out that the use of a C-corporation structure could conflict with existing rules governing ETFs, likely resulting in delays for final decisions on these staking products until October.
The SEC has expressed its concerns over the structure of the newly proposed staked ETFs for Solana and Ether, suggesting these financial products may not align with current ETF qualifications. The SEC observed that the C-corp structure—an uncommon option for ETFs—clashes with Rule 6C-11, widely known as the “ETF rule,” which specifies acceptable fund structures.
ETF provider REX Financial and asset manager Osprey Funds have recently made amendments to their registration applications for these funds, but uncertainty remains. On May 30, the SEC issued a letter highlighting unresolved inquiries into whether the proposed ETFs, if created and managed as outlined, would meet the definition of an “investment company” under the Investment Company Act.
SEC Raises Compliance Concerns
The SEC’s letter indicated that there might be potentially misleading information regarding the funds’ investment company status. Despite these regulatory challenges, there remains a degree of optimism among analysts. Bloomberg ETF analyst Eric Balchunas noted on May 31 via X that REX’s legal team is confident they can resolve the issues identified by the SEC.
“Issuers are pushing the envelope hard in an effort to get first to market,” he stated, emphasizing the competitive nature of the ETF landscape.
Update: SEC sent a letter to REX last night expressing concern over an improper filing. REX’s lawyer believes they can find a resolution. The situation seems reminiscent of the $PRIV case. Issuers are firmly trying to gain a market advantage. Saturday scoop from @isabelletanlee https://t.co/6fnYf5Oo2V pic.twitter.com/NHTvOQyDsO
— Eric Balchunas (@EricBalchunas) May 31, 2025
Market analysts are monitoring the advancement of altcoin and staking-related ETFs closely, anticipating that these financial instruments could serve as a significant entry point for new institutional investments in the cryptocurrency sector.
This cautious approach from the SEC comes despite its earlier clarification that crypto staking activities do not automatically equate to securities transactions. However, the agency continues to postpone decisions on several staking and altcoin ETF applications.
While these delays are not entirely surprising, as many filings have final review deadlines set for October, analysts underscore that early approvals for ETF applications are rare. Bloomberg’s James Seyffart remarked on this trend, noting that such timings are generally atypical.
BlackRock’s Bitcoin ETF Faces Significant Outflows
In related developments, BlackRock’s iShares Bitcoin Trust (IBIT) witnessed notable outflows amounting to $430.8 million on May 30, marking the end of a 31-day streak of inflows, which was the longest since its inception.
This significant outflow represents the highest single-day withdrawal for IBIT to date, according to data from Farside, following an impressive month during which BlackRock accumulated $6.2 billion in Bitcoin assets.
Even after this downturn, IBIT’s total Bitcoin holdings are estimated to remain around $70 billion. The outflows are part of a broader trend affecting U.S. spot Bitcoin ETFs, which experienced $616.1 million in net redemptions on the same day, making it the second consecutive day of outflows.
The preceding day had seen withdrawals totaling $346.8 million. Notably, BlackRock was the only issuer to observe inflows on May 29, amidst a landscape where others faced redemptions.
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