Emre Yumlu 
The U.S. Securities and Exchange Commission (SEC) has raised serious legal concerns regarding exchange-traded funds (ETFs) based on Ethereum (ETH) and Solana (SOL). The inclusion of staking mechanisms in these ETFs has sparked debate over whether they meet the legal definition of an “investment company” under U.S. law.
SEC Questions the Definition of Investment Company
In an official letter addressed to ETF Opportunities Trust, the SEC stated that there are still unresolved questions about whether the ETH and SOL ETFs proposed by REX Shares and Osprey Funds meet the legal requirements outlined in the Investment Company Act of 1940. The focus is particularly on how the staking components impact the overall structure of these funds.
These ETFs were registered with the SEC on January 21, and although the registration process was technically completed as of May 30, they have not yet been launched or listed on any exchange.
According to the SEC’s evaluation, the ETFs may not meet the necessary conditions to file under the correct registration format, Form N-1A. Furthermore, they may not qualify under Rule 6c-11, which allows ETFs to operate without seeking individual exemptive relief.
SEC Statement: Unclear Stance on Staking
The SEC’s warning comes just one day after the agency issued guidance indicating that some types of staking—such as self-staking and custodial staking—do not fall under the federal securities laws.
However, this guidance is not legally binding and faced opposition from SEC Commissioner Caroline Crenshaw, who argued that the announcement further increases legal uncertainty.
The SEC emphasized that if the current questions remain unanswered, it will take appropriate steps to ensure the funds comply with federal securities regulations.
Not Just ETH and SOL
The filing in question also included other cryptocurrency-related funds tied to Dogecoin (DOGE), BONK, and TRUMP. Still, the SEC’s primary focus has been on the legal structure of the ETH and SOL ETFs involving staking.
This development could mark a critical turning point for the future of crypto-backed ETFs. Following the approval of spot ETFs in the U.S. market, it’s become clear that products centered around staking also require regulatory clarity.
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