REX Shares Takes the Plunge: Ethereum and Solana ETFs on the Horizon!

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In a move that could make even the most stoic of financial analysts raise an eyebrow, REX Shares has decided to tango with the US Securities and Exchange Commission (SEC) by filing for not one, but two new exchange-traded funds (ETFs) dedicated to the illustrious Ethereum and the ever-so-charming Solana. 🎩

Submitted on the 30th of May, this filing was marked “immediately effective,” which, if you ask me, sounds like the financial equivalent of a starter pistol going off at the races. The launch could be just around the corner, so hold onto your hats! 🎉

REX’s Daring ETF Filings: A Test of SEC’s Stance on Staking

According to the SEC filing, these ETFs will not just sit pretty; they will hold the underlying crypto assets and stake a portion of them. Yes, you heard that right! Each fund plans to invest at least 80% of its assets in either Ethereum or Solana, with a cheeky 50% of those holdings staked to earn on-chain rewards. Investors can expect to receive these rewards as dividend income, which sounds positively delightful! 💰

Bloomberg ETF analyst Eric Balchunas, a man who knows his way around a filing or two, highlighted the significance of this move. He noted that it could lead to the launch of the first spot Solana ETF, as current offerings are about as exciting as watching paint dry—only tracking Solana futures. 🥱

He also mentioned that REX cleverly leveraged the Investment Company Act of 1940 (40 Act) to fast-track the listing. This nifty maneuver allows the firm to sidestep the longer, more tedious process tied to the Securities Act of 1933 (33 Act). Talk about a legal loophole that would make a cat burglar proud! 🐱‍👤

“First-ever staked Ether and Solana ETFs could be launching soon. REX filing went effective (meaning launch likely in near-term). Would also be first-ever spot Solana too (only futures exist curr). This is the benefit of using 40 Act, it’s faster track to mkt but more work/boxes…”

— Eric Balchunas (@EricBalchunas) May 30, 2025

Moreover, these funds will operate as C corporations, which is about as common in the ETF world as a unicorn at a tea party. This structure provides specific tax advantages, particularly for staking-related activities. Who knew taxes could be so thrilling? 🎢

James Seyffart, another Bloomberg ETF analyst, called the move a “clever legal and regulatory workaround” to bring staking-based ETFs to market. Clever indeed, like a fox in a henhouse! 🦊

“These ETFs are structured as c-corps which is very rare in the ETF world. Only really used for some MLP ETFs that I can think of top of my head. There are pros and cons to the structure but looks like one pro is that this was one way to get some level of signoff from the SEC,” Seyffart stated.

However, he did throw a bit of cold water on the parade, cautioning that the long-term viability of this approach remains as uncertain as a cat in a room full of rocking chairs. More efficient structures, such as grantor trusts, could eventually replace C-corp ETFs. 🐱

“There might be more efficient vehicles/structures for this type of exposure that come to market in the future. Maybe even later this year. Maybe later than that. There are lots of questions about grantor trusts and their ability to do staking that will likely require input from the IRS,” Seyffart added.

Meanwhile, market observers have noted that this filing comes shortly after the SEC decided to sprinkle a bit of clarity on the murky waters of crypto staking. On Thursday, the financial regulator clarified that staking models do not automatically qualify as securities. It’s like they finally found their glasses! 👓

“The Division of Corporation Finance clarified its view that certain proof-of-stake blockchain protocol “staking” activities are not securities transactions within the scope of the federal securities laws,” SEC Commissioner Hester Peirce said.

Industry experts like Nate Geraci of the ETF Store believe this regulatory clarity could open the floodgates for new crypto investment products. ETF issuers may now offer direct exposure to yield-generating digital assets through a familiar financial wrapper. It’s like Christmas morning for investors! 🎁

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2025-05-31 13:26