SEC Questions ETF Classification of Proposed Staked Solana and Ether Funds

Key Takeaways:

• The SEC has raised concerns regarding the structure of proposed staked Solana and Ether ETFs.
• The agency identified the C-corp structure as inconsistent with ETF regulations.
• Final determinations on staking ETFs are expected to be postponed until October.

The U.S. Securities and Exchange Commission (SEC) has expressed apprehensions about the framework of proposed staked exchange-traded funds (ETFs) for Solana (SOL) and Ether (ETH), contending that these products may not meet the criteria to be classified as ETFs under existing regulations.

ETF provider REX Financial and asset management firm Osprey Funds have recently filed amendments for the registration of these funds.

However, as reported by Bloomberg, the SEC has pointed out that the adoption of a c-corporation (c-corp) structure, which is an uncommon choice for ETFs, conflicts with Rule 6C-11, commonly known as the “ETF rule,” which outlines acceptable fund structures.

SEC Raises Compliance Concerns Regarding Proposed ETF Structures

The SEC staff indicated that they still have outstanding inquiries about whether the proposed funds, if structured and managed as intended, fulfill the definition of an “investment company” under the Investment Company Act, according to a letter dated May 30.

The letter also cautioned that disclosures regarding the funds’ investment company status “may be potentially misleading.”

In spite of the regulatory challenges, analysts maintain a degree of optimism. “REX lawyers believe they can resolve the issues,” Bloomberg ETF analyst Eric Balchunas remarked in a May 31 post on X.

“Issuers are pushing the boundaries significantly in an attempt to be first to market.”

Update: SEC sent letter to REX last night expressing concerns about improper filing. REX lawyer states they can resolve it. Feels somewhat similar to the $PRIV situation. Issuers are pushing boundaries hard in an effort to be first to market. Saturday scoop from @isabelletanlee https://t.co/6fnYf5Oo2V pic.twitter.com/NHTvOQyDsO

— Eric Balchunas (@EricBalchunas) May 31, 2025

Market participants are closely monitoring the developments surrounding altcoin and staking-based ETFs, perceiving them as a potential entry point for new institutional capital into the crypto market.

The SEC’s caution arises even after it clarified earlier this year that crypto staking, in itself, does not qualify as a securities transaction.

Nonetheless, the agency has postponed decisions on multiple staking and altcoin ETF applications.

These delays are not surprising. “Almost all of these filings have final due dates in October,” Bloomberg analyst James Seyffart noted.

“It is unusual for ETF applications to receive approval so early.”

BlackRock’s Bitcoin ETF Experiences Record $430M Outflows

As reported, BlackRock’s iShares Bitcoin Trust (IBIT) experienced $430.8 million in outflows on May 30, concluding a 31-day inflow streak — its longest since inception.

This event marks IBIT’s largest single-day outflow to date, according to Farside data, following a month in which BlackRock added $6.2 billion in Bitcoin.

Despite the decline, IBIT’s total Bitcoin holdings now amount to approximately $70 billion.

The outflows were part of a wider trend among U.S. spot Bitcoin ETFs, which recorded $616.1 million in net redemptions on May 30 — marking the second consecutive day of outflows.

The previous day had seen $346.8 million withdrawn. Notably, BlackRock was the only issuer to report inflows on May 29, while others experienced redemptions.

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