- The SEC raised legal concerns about whether the Ethereum and Solana ETFs with staking qualify as investment companies under federal law.
- This comes shortly after the SEC said most crypto staking isn’t subject to securities rules, creating regulatory uncertainty.
The U.S. Securities and Exchange Commission (SEC) recently raised significant legal concerns about two proposed exchange-traded funds (ETFs) linked to Ethereum (ETH) and Solana (SOL). These ETFs, part of the REX-Osprey collaboration, include staking components that have sparked questions about their compliance with longstanding securities laws.
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SEC Legal Uncertainty Surrounding Staking-Linked ETFs
On May 30, 2025, the registration statements for the REX-Osprey ETH and SOL ETFs became effective. However, the funds have not launched or listed on any exchange yet.. The SEC expressed unresolved doubts about whether these ETFs meet the definition of an “investment company” under the Investment Company Act of 1940. This act requires that such companies primarily invest in securities or hold securities representing over 40% of their total assets.
The SEC’s letter to counsel for ETF Opportunities Trust — the Delaware-based entity serving as issuer for these ETFs — pointed out that the ETFs may have been improperly filed using Form N-1A, reserved for qualifying investment companies. Moreover, the SEC questioned whether these ETFs satisfy the criteria under Rule 6c-11, which allows ETFs to operate and list without needing individual exemptions.
These regulatory questions create uncertainty about when, or if, the Ethereum and Solana ETFs will receive full approval for public trading. The SEC indicated that it may take further steps to enforce compliance with federal securities laws if these concerns remain unresolved.
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SEC’s Contradictory Stance on Crypto Staking
The SEC’s concerns come just a day after the agency issued new guidance clarifying that most crypto staking activities, including self-staking and custodial staking, do not fall under federal securities laws—provided certain conditions are met. Staking involves locking cryptocurrency assets to support blockchain networks, a process intrinsic to many public, permissionless networks.
This recent guidance marked a shift away from previous, more aggressive enforcement actions targeting staking. However, Commissioner Caroline Crenshaw dissented, warning that the guidance creates more uncertainty about legal boundaries.
What’s Next for Crypto ETFs?
The SEC’s caution towards staking-linked ETFs reflects the regulator’s ongoing struggle to fit innovative crypto products within existing financial laws designed decades ago. While the staking guidance offers clarity for many crypto users, ETFs incorporating staking elements face a tougher path to approval.
As regulatory scrutiny continues, investors and sponsors of crypto ETFs must navigate a complex landscape balancing innovation and compliance. The fate of Ethereum and Solana ETFs remains uncertain, underscoring the broader challenge of integrating blockchain-based assets into traditional markets.
If you want to stay updated on crypto regulations and ETF launches, keep an eye on SEC announcements and industry news. The evolving dialogue between regulators and crypto innovators will shape how these digital assets enter mainstream finance.
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