Are Ethereum and Solana ETFs Facing Legal Hurdles? What the SEC’s Concerns Mean for Investors

The U.S. Securities and Exchange Commission (SEC) has raised issues regarding REX-Osprey’s application for Solana (SOL) and Ethereum (ETH) ETF staking. This potential delay highlights ongoing regulatory scrutiny in the crypto space.

REX-Osprey applied for the SOL and ETH ETF staking on May 30, aiming for a faster launch under the Investment Company Act of 1940. However, the SEC flagged the application, claiming it might have been improperly filed, raising concerns about whether the disclosures in their registration statement are misleading.

Bloomberg ETF analyst James Seyffart commented on this situation. He mentioned that while the launch date isn’t clear, it could be sooner than expected since these funds have a unique structure. In his words, “These are 40-Act funds with a unique structure and do not go through the 19b-4 process,” which is generally more arduous.

Reacting to the SEC’s concerns, Seyffart noted that the agency seems to believe these products don’t qualify under the streamlined 6c-11 provision. This provision allows for quicker applications and could simplify the process for ETF approvals.

Despite these challenges, Nate Geraci from ETF Stores remains optimistic. He believes that the SEC will eventually approve these products, suggesting that a more straightforward approach to crypto ETF regulations could emerge soon.

On the other side, Greg Collett, general counsel at REX Financial, expressed confidence that they could resolve the SEC’s concerns regarding their investment company status. Notably, the SEC recently clarified that staking services like SOL and ETH generally do not qualify as securities. This could increase the likelihood of ETF staking approvals.

Meanwhile, Grayscale’s ETH ETF staking application, which follows the 1934 Act, is also under SEC review, with a decision deadline that passed on June 1.

Market reactions reflect this ongoing situation. As of now, ETH is trading around $2,400, marking a 35% increase over the past month, while SOL is priced at $153, with a 4% rise in the same timeframe. Ethereum’s market sentiment is currently at a “greed” level, indicating a bullish outlook, whereas enthusiasm surrounding Solana remains neutral.

As we navigate the ever-evolving landscape of crypto regulations, these developments serve as a reminder of the challenges and opportunities that lie ahead for digital assets.

For further updates, you can check the SEC’s official site for more insights on their rulings.



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