- Staked Ethereum and Solana ETFs will stake at least 50% of holdings
- Anchorage Digital to provide custodial support for staked Ethereum and Solana ETFs
- Staking rewards treated as dividend income for ETF holders
REX Shares and Osprey Funds have filed with the U.S. Securities and Exchange Commission (SEC) to launch staking exchange-traded funds (ETFs) for Ethereum (ETH) and Solana (SOL). The Staked Ethereum and Solana ETFs will track the value of ETH and SOL as well as stake at least 50% of their holdings to generate token rewards. The application is a major step in crypto ETFs because it links traditional fund structures with the growing staking market.
Staked Ethereum and Solana ETF Structure
According to the SEC filing, at least 80% of the funds will be invested in ETH and SOL. The funds will stake at least half of their assets to give users staking rewards. This follows the industry’s trend toward staking as a good method to manage crypto assets. Anchorage Digital, a regulated custodian by the US government, will provide custody and support staking of the ETFs.
The application comes after the SEC approved the first Bitcoin ETFs to trade which opened the market for more crypto investments. Although the SEC has been cautious with staking, the approval of spot Bitcoin and Ethereum ETFs now opens the market for staking-related ETFs. The launch of these products could clarify taxation of staking and its role in cryptocurrency funds.
Taxation and Classification of Staking Income
The proposed Staked Ethereum and Solana ETFs will be taxed as regular C corporations in the U.S, unlike traditional regulated investment companies used by spot Bitcoin and Ethereum ETFs.
Investors will receive their staking rewards as dividend income which is different from other traditional investments. This approach could help to overcome the regulatory obstacles that have stalled the staking funds launch.
The Ethereum ETF will cost 1.28% in annual operational charges and the Solana ETF will be 1.4%. These cover the cost of funds management and staking services such as exposure to the crypto assets and staking returns. The funds are intended to draw investors who seek regulated investment in staking as well as still own Ethereum and Solana.
Shaky Regulatory Environment Delays ETFs Approval
The filing by REX Shares and Osprey Funds is seen as an important advance in staking-based ETFs. If approved, investors will be able to collect rewards from staking Ethereum and Solana as well as benefit from any growth in their prices.
However, some firms are still awaiting approval for non-staking crypto ETFs such as those based on Solana which suggests an uncertain regulatory situation for these funds.
Related Reading | Cardano (ADA) Price Prediction: $7 Target Possible If Crypto Market Hits $10 Trillion