REX Shares and Osprey Funds file with SEC to offer staking Ethereum and Solana ETFs

REX Shares and Osprey Funds plan to offer so-called "staking ETFs" that provide holders with token rewards while also tracking the underlying Ethereum and Solana assets, according to a U.S. Securities and Exchange Commission filing on Friday.

According to the firm’s SEC Form N-1A, the registration form for open-end management companies to offer mutual and exchange-traded funds to the public, the new ETH and SOL funds will invest "at least 80% of its net assets in its respective reference asset," i.e., ETH and SOL.

Each fund will also stake "at least 50% of its holdings" in these cryptocurrencies. It is unclear which custodian or staking service REX-Osprey will use for these purposes.

ETFs are an increasingly popular way for investors to gain exposure to cryptocurrencies, ever since the SEC approved the first class of spot Bitcoin ETFs in early 2024. Bitcoin ETFs, as a category, quickly became one of the most performant assets, largely driven by the outpaced success of BlackRock’s IBIT Bitcoin ETF .

Although the securities watchdog has approved other crypto-related ETFs , including spot Ethereum funds and blended products, it has been hesitant to approve products that will allow issuers to stake their underlying holdings to generate revenue.

However, following the election of President Donald Trump, industry advocates and lobbyists have been meeting with federal agents to discuss how to best clarify the regulatory situation around staking, including the approval of staking funds and tax obligations related to staking rewards.

For instance, the Jito Foundation was one of the first industry representatives to meet directly with the SEC’s crypto task force and discuss this relatively narrow concern. 

Proof-of-stake systems require users to lock up assets to prevent malicious takeovers, and in exchange, pay out returns to those who secure said blockchain or application.

REX-Osprey notes the funds, if approved, will be treated as a “regular C corporation” for U.S. federal income tax purposes rather than a “regulated investment company” — or 19b-4 exchange rule-change process — used by spot Bitcoin and Ethereum ETFs. As such, staking distributions to holders will be treated as dividend income.

"All of this, assuming they launch in near future, is a bunch of clever legal and regulatory work-arounds to get these products to market," Bloomberg Intelligence analyst James Seyffart said in a post on X. "That said. There might be more efficient vehicles/structures for this type of exposure that come to market in the future. Maybe even later this year."

Notably, the SEC has yet to approve has yet to approve even a non-staking spot Solana ETF, though several firms have open applications. In March, the CME listed SOL futures, which some industry experts see as a stepping stone to a spot fund approval. Eric Balchunas, also of Bloomberg, noted REX-Osprey's strategy could also be a "faster track to [market.]" 

The ETH and SOL funds will carry “total annual fund operating expenses” of 1.28% and 1.4%, respectively.