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SEC questions whether ETH and SOL ETFs from REX-Osprey qualify as investment companies.
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The concerns surfaced just a day after the SEC exempted staking from securities rules.
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Registration became effective May 30, but the funds haven’t launched or listed.
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SEC may take further action if legal issues remain unresolved.
Legal Uncertainty for ETH and SOL ETF Plans
The SEC has flagged unresolved legal issues with two proposed ETFs tied to Ethereum and Solana, both of which include staking. The agency questioned whether the funds, filed by REX Shares and Osprey Funds under the ETF Opportunities Trust, meet the definition of an “investment company” under the 1940 Act.
Timing Raises Eyebrows
The concerns were raised just a day after the SEC issued long-awaited guidance confirming that many crypto staking activities, including self and custodial staking, do not constitute securities transactions. That guidance had been seen as a win for staking-linked ETFs, yet the follow-up letter signals lingering hesitation.
What’s at Issue
The SEC noted that the ETFs may be improperly structured to file under Form N-1A, which is designated for regulated investment companies. The funds might also fall short of the conditions under Rule 6c-11, which allows streamlined ETF approvals.
If the funds are not primarily investing in securities or if they include too much exposure to non-security crypto assets, they may fail to qualify, leading to possible enforcement action or delayed launch.
Market Still Waiting
The ETFs officially became registered on May 30, but they are not yet listed on any exchange. The SEC’s next steps remain unclear. While the new staking guidance opens the door for broader ETF designs, this latest case shows that implementation remains legally complex.
