The U.S. Securities and Exchange Commission (SEC) has raised serious concerns over the legality of two proposed staking ETFs from REX Shares and Osprey Funds, just hours after their registration statements went live.
The funds aim to function as C-corporation ETFs that invest in Ethereum and Solana, with a strategy to stake at least 50% of the assets to generate additional yield. However, this innovative model appears to be hitting a regulatory wall.
According to a letter sent late Friday by SEC Associate Director Brent J. Fields, the Commission still has “unresolved questions” about whether the products would qualify as legitimate investment companies under the Investment Company Act of 1940. The warning raises the risk of forced refiling or potential enforcement action against the issuers.
Bloomberg Intelligence analyst James Seyffart characterized the ETF structure as relying on “a bunch of clever legal and regulatory work-arounds.” Despite the innovative approach, the SEC’s response signals ongoing discomfort with staking-based financial products entering mainstream markets.
The regulatory pushback comes amid heightened scrutiny of crypto-linked investment vehicles. While spot Bitcoin ETFs have gained limited acceptance, products involving staking continue to face tougher resistance from U.S. regulators.
The outcome of this challenge may set a significant precedent for how staking-based yield strategies are treated in publicly traded investment products going forward.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
Source: https://coindoo.com/sec-flags-legal-concerns-over-rex-and-ospreys-staking-etf-plans/