SEC Questions REX-Osprey’s ETH, SOL ETF Filings
The Essentials at a Glance
- The U.S. Securities and Exchange Commission (SEC) has raised legal concerns regarding REX-Osprey’s ETF applications for Ethereum (ETH) and Solana (SOL).
- The applications relate to staking ETFs under the Investment Company Act of 1940 (40-Act), rather than the usual process under the Securities Exchange Act of 1934.
- Despite this, one analyst expects a possible approval by the end of the year.
- Market sentiment for ETH is currently positive, while for SOL it is neutral.
What Exactly Happened?
At the end of May, REX-Osprey submitted an application to the SEC to launch exchange-traded funds (ETFs) for Ethereum and Solana with staking functionality. They opted for an alternative route via the Investment Company Act of 1940. The goal was to accelerate the approval process.
However, the SEC responded quickly and raised legal objections. It particularly criticized the form of the submission (Form N-1A) and questioned whether the funds were correctly classified as investment companies. According to the SEC, the information in the application could be misleading.
What Does This Mean for Approval?
Normally, ETFs go through what is known as the 19b-4 process, which is governed by the Securities Exchange Act of 1934. REX-Osprey tried to bypass this by structuring the ETFs as so-called 40-Act funds. This structure allows for a faster approval under certain conditions.
However, some experts, such as Bloomberg analyst James Seyffart, suspect that the SEC believes these products do not meet the requirements for simplified approval under Rule 6c-11. This rule was introduced to streamline ETF approvals under the Investment Company Act of 1940.
How Are Stakeholders Responding?
REX CFO Greg Collett expressed confidence that his company can address the SEC’s outstanding concerns. ETF expert Nate Geraci is also optimistic. He expects approval of the staking ETFs for ETH and SOL later this year.
The SEC recently clarified that many staking services — including ETH and SOL — are not considered securities offerings. This could improve the chances of eventual approval.
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Market Performance of ETH and SOL
At the time of publication, Ethereum was trading at around USD 2,400 — a 35% increase over the past 30 days. According to the Fear & Greed Index, market sentiment was in the “Greed” range.
Solana was trading at about USD 153. The price rose by 4% compared to the previous month. Market sentiment was neutral.
What Does This Mean for You?
If you’re interested in investing in crypto ETFs, you should closely monitor regulatory developments. The SEC plays a central role in the approval of new products. Delays are possible, but not necessarily a sign of rejection.
Especially for investors focused on staking, new ETF products could offer attractive opportunities in the future — provided they receive approval.
Our Assessment
The SEC remains cautious about crypto products, particularly when it comes to new structures like staking ETFs. REX-Osprey’s attempt to accelerate the approval process shows innovation — but also carries legal risks.
In the long term, ETH and SOL staking ETFs could be approved if providers meet regulatory requirements. For you as an investor, this means: stay patient and keep an eye on developments. The chances are fairly good that these products could hit the market by 2025.
Sources
- Bloomberg
- ETF Store
- REX Financial
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