Solana 'Staking ETF' Approved…Expectations Rise for Ethereum

Differentiated ETF Structure as the Basis for Approval

'Ethereum Staking ETF' Also Filed

Probability of Approval Increases

Accelerated Institutional Capital Inflow Expected

The U.S. Securities and Exchange Commission (SEC) has approved the launch of a Solana (SOL) staking exchange-traded fund (ETF), boosting anticipation for an Ethereum (ETH) staking ETF as well.

On the 2nd (local time), U.S. asset management firms REX Shares and Osprey listed the Solana (SOL) staking ETF (ticker: SSK) on the Chicago Board Options Exchange (CBOE) and commenced official trading. This ETF is drawing attention as the first staking ETF to be launched with SEC approval. Notably, the approval is expected to drive up the possibility of an Ethereum staking ETF, which has faced repeated delays due to ongoing securities classification issues.

Adoption of C-Corporation Structure…Resolving Securities and Tax Uncertainty

The reason the Solana staking ETF was able to clear SEC hurdles so swiftly is attributed to its adoption of a 'C-Corporation (C-Corp + 40 Act)' structure utilizing a third party. This model allows the fund manager to receive staking rewards through a third-party service provider rather than directly, and distribute these rewards to investors as dividends.

As the manager does not directly receive the staking rewards, the arrangement is not considered an investment contract under the Howey Test, the SEC's criterion for securities classification. Furthermore, staking earnings are deemed corporate income, clarifying associated tax-related ambiguities.

James Seyffart, a Bloomberg analyst, commented, "The Solana staking ETF was able to bypass the 19b-4 rule amendment procedure thanks to the unique C-Corporation structure," adding, "This essentially shows the SEC's acceptance of a legal solution."

Meanwhile, the Ethereum staking ETF is structured as a trust, with the manager directly receiving and distributing staking rewards to investors, which continues to pose challenges for approval.

Expectations for 'Ethereum Staking ETF' Approval…Institutional Inflow Set to Accelerate

The approval of the Solana staking ETF is seen as providing practical guidance for the Ethereum staking ETF.

Crypto-focused media outlet Blockworks remarked, "The approval of the Solana staking ETF effectively provides a clear direction for the Ethereum staking ETF." James Seyffart, Bloomberg analyst, noted, "REX Shares and Osprey have also filed for an Ethereum staking ETF with the same structure," expressing strong expectations for its approval.

There is further anticipation that staking ETFs for Solana and Ethereum will accelerate institutional capital inflow. Sygnum Bank projected in a report, "Unlike Bitcoin, staking-enabled Solana and Ethereum ETFs will gain attention as income-generating assets." JPMorgan analyzed, "If staking is permitted for the Ethereum ETF, capital inflows could double the previous estimate (about $3 billion)."

Donghyuk Kim, a researcher at Dispread, stated, "If the approval of the Solana staking ETF establishes Solana as a long-term investment asset among institutional investors, it will greatly benefit the overall ecosystem."

Kyungpil Jang, head of Xangle Research, also commented, "The launch of the Solana staking ETF is significant in its potential to accelerate institutional capital inflow," adding, "Should the Ethereum staking ETF be launched, Ethereum’s appeal to institutional investors will further increase."