REX Shares and Osprey Funds Propose Staking ETFs

TLDR

• REX and Osprey propose ETH and SOL staking ETFs.
• SEC reviews regulatory compliance for proposed ETFs.
• Approval could increase institutional demand for staking.

REX Shares and Osprey Funds have recently submitted applications to the U.S. Securities and Exchange Commission (SEC) to introduce Ethereum (ETH) and Solana (SOL) staking ETFs. These proposed funds, designated as the REX-Osprey™ ETH + Staking ETF and REX-Osprey™ SOL + Staking ETF, aim to provide investors with exposure to staking rewards without requiring them to directly hold the underlying cryptocurrencies.

The ETFs are structured using a combination of C-Corporation structures and Cayman Islands subsidiaries. The proposed listings will be on Nasdaq, contingent on meeting regulatory compliance.

Osprey Funds and REX Shares: Historical Insights

Both REX Shares and Osprey Funds have established reputations within the digital asset investment space. REX Shares is known for its expertise in crafting complex ETF structures, particularly in the traditional and leveraged ETF markets. Meanwhile, Osprey Funds has previously introduced the Osprey Bitcoin Trust (OBTC), signaling its commitment to bringing crypto exposure into mainstream finance.

In recent years, Osprey attempted to launch other crypto-backed funds, underscoring its active role in digital financial products. It has tailored its strategies towards making digital assets more accessible to institutional and individual investors alike.

Current Regulatory Scrutiny from the SEC

The SEC is meticulously reviewing the proposed prospects of REX and Osprey. Concerns have been raised regarding the regulatory status and the protection extended to investors involved in the staking activities. Given the SEC’s rigorous standards, the fate of these ETFs hangs in the balance of regulatory approval.

Currently, there are no official comments from the SEC or the key executives of either company. The lack of public statements might indicate ongoing sensitive negotiations. The detailed filing information is accessible through Osprey’s registration statement.

Potential Impact on Ethereum and Solana

If approved, these funds could significantly increase institutional demand for staking. This demand would potentially raise the locked supply of ETH and SOL, thereby affecting liquidity on exchanges. However, at present, no notable shifts in total value locked or on-chain staking flows have been observed.

The broader market is likely awaiting regulatory clarity before making any large-scale capital reallocations or price adjustments. Past approval of U.S. spot Bitcoin ETFs has paved the way for similar inflows into the market, providing a historical reference point for potential outcomes with the staking ETFs.

Link to Broader Crypto Ecosystem

While the primary focus remains on ETH and SOL, the implications extend to other derivatives. This includes staking derivatives like Lido Staked Ether (stETH) and Marinade staked SOL (mSOL), along with protocols with extensive exposure to ETH or SOL staking, like Lido or Rocket Pool.

No immediate contributions to on-chain data, roadmap updates, or mass discussions in developer forums have been documented. However, the potential SEC stance may determine future precedents in staking securities in the U.S. market.

Overall, the attempt by REX Shares and Osprey Funds to launch staking ETFs presents a novel legal framework that may redefine staking participation in a regulated context. Industry observers continue to watch developments closely.