All Sunshine for First Spot Solana ETF

The first spot-price Solana ETF has landed, and it’s in a lonely position.

The Rex-Osprey SOL + Staking ETF (SSK) started trading last Wednesday on Cboe after being approved by the Securities and Exchange Commission the previous week. While numerous ETF issuers have been queuing up for spot Solana approval, most have filed their products under the Securities Act of 1933, rather than the 1940 Act, as the Rex-Osprey fund did. Spot-price crypto exchange traded products, such as those for bitcoin and ether, have had success in getting the SEC’s approval under the 1933 Act, given the regulator’s stance that the crypto assets may not be securities. However, the path for products that offer proof-of-stake rewards, in which crypto owners are compensated for “staking” some of their tokens to validate transactions on the network, has not been as easy. Filing under the 1940 Act, which covers securities, worked in Rex-Osprey’s favor.

“We took a different path,” the companies’ founder and CEO Greg King said. “The innovation here is we were able to use a 40 Act structure to bring Solana exposure to the market.”

What’s At Stake

Demand for anything other than spot bitcoin and, to a lesser extent ether, in ETF or ETP form hasn’t been strong. The question is whether staking could meaningfully change that. “It’s like having your money in a checking account that pays zero versus putting it in a money market,” King said. Total expenses for the ETF are 128 basis points, 75 of which are the management fee.

Observers had tempered optimism about the fund’s potential:

• “I’m a fan. All the staking yield is passed to investors with payouts, and Solana in and of itself has great upside potential,” financial consultant Tyrone Ross Jr. said. “The only thing I would quibble with is the fee.”
• “It’s gaining significant interest despite not being a traditional 33 Act spot ETF,” said Roxanna Islam, head of sector and industry research at TMX VettaFi. “But assuming the 33 Act spot Solana funds are launched with fees in line with current spot bitcoin and ether ETFs, that could make this a close race, even with SSK having a significant head start.”

Time in the Sun: The current SEC leadership’s change in treatment of crypto, compared with the prior administration’s, has been encouraging, King said. And, at least on the first day of trading, there was strong interest in the ETF, with more than 800,000 shares traded before noon, he noted. “We’re having a great kickoff day.”

— Emile Hallez