- The SEC flagged REX-Osprey’s SOL/ETH staking ETF filing as potentially improper and misleading, causing likely launch delays.
- REX’s counsel stated readiness to address SEC concerns about the funds’ ‘investment company’ status and disclosures.
The U.S. Securities and Exchange Commission has challenged the registration filing for proposed exchange-traded funds from REX-Osprey. These funds would allow investors to gain exposure to Solana and Ethereum while incorporating staking rewards. This regulatory action creates potential delays for the anticipated products.
REX-Osprey submitted its application on May 30th. The firm utilized a structure governed by the Investment Company Act of 1940. This approach aimed for a faster path to market compared to the standard process under the Securities Exchange Act of 1934. Bloomberg ETF analyst James Seyffart previously noted this structure bypasses the typical 19b-4 filing step.
He suggested a launch could happen within weeks.
BIG NEWS: @REXShares just filed an effective prospectus for Solana and Ethereum staking ETFs to list here in the US. Don’t know launch date but could be within the next few weeks. These are 40-act funds with a unique structure and do not go through the 19b-4 process pic.twitter.com/cqUCWlFAZW
— James Seyffart (@JSeyff) May 30, 2025
However, the SEC responded quickly with concerns. The regulator sent a letter to ETF Opportunities, the legal firm handling the REX application. The SEC stated it believes the funds “may have improperly filed their registration statement on Form N-1A.” The letter also indicated disclosures about the funds’ status as investment companies “may be potentially misleading.” This filing form is standard for mutual funds and certain ETFs.
Seyffart interpreted the SEC’s stance
He stated the regulator likely argues the funds do not qualify under Rule 6c-11 of the 1940 Act. This rule allows certain ETFs to operate more efficiently. Without qualifying, listing the funds as structured becomes difficult.
Here’s an image of what that letter actually says. (Keep in mind I am not a lawyer but I sometimes pretend to understand this stuff and will do my best)
Essentially, the SEC seems to be saying that the clever legal and regulatory moves used to wedge this thing through have… pic.twitter.com/ZioCKfcevq
— James Seyffart (@JSeyff) May 31, 2025
Conversely, Nate Geraci from ETF Stores expressed continued confidence. He expects both staking within ETH and SOL ETFs, along with spot SOL ETFs, to gain approval later this year. “Never a dull moment in crypto ETF land,” Geraci remarked.
Interesting…
Looks like SEC has defense ready for end-around.
Never a dull moment in crypto ETF land.
All this can be solved by SEC approving spot sol ETFs & allowing staking in both eth & sol ETFs. Think both will happen later this year anyways. https://t.co/cPCVWf9u2L
— Nate Geraci (@NateGeraci) May 31, 2025
REX Financial’s General Counsel, Greg Collett, addressed the SEC’s letter. Collett stated REX is prepared to answer the SEC’s questions regarding the ‘investment company’ classification. This follows the SEC’s recent clarification. Last week, the regulator stated most staking services, including those for SOL and ETH, do not constitute securities offerings.
Attention now shifts partly to Grayscale’s separate application for Ethereum ETF staking. Grayscale filed its application under the 1934 Act. The SEC’s final decision deadline for that filing occurred on June 1st.
At the time of reporting, Ethereum traded near $2,400. Its price increased 35% over the preceding 30 trading days. Solana traded near $153, showing a 4% gain over the past month. The path forward for the REX-Osprey funds requires resolving the SEC’s specific filing objections. This introduces regulatory uncertainty for these specific products in the near term.
