- SEC says RexShares’ Solana and Ethereum staking funds may not qualify as investment companies under federal legal standards.
- Registration filings used by RexShares were labeled potentially misleading due to their structure and fund classification language.
- RexShares has paused the fund launches and is working with the SEC to resolve legal and compliance questions.
RexShares’ effort to bring Solana and Ethereum staking exchange-traded funds to the U.S. market has encountered resistance from the Securities and Exchange Commission. The agency has raised legal concerns over the classification of the funds. According to a letter reviewed by Bloomberg, the SEC stated that the proposed funds may not meet the legal definition of an investment company under federal law.
The SEC communicated its concerns to the ETF Opportunities Trust, which manages several funds, including those affiliated with RexShares. The letter noted that the registration statements used for the proposed ETFs may have been improperly filed. The agency emphasized that the way the funds were described in the disclosures could be misleading for investors.
Unconventional Approach Draws Scrutiny
RexShares had filed the staking ETFs under the Investment Company Act of 1940 rather than the more common 19b-4 application process. This alternate approach drew attention for its departure from typical ETF filing structures. The model raised questions among analysts about how the SEC would respond. The agency’s response signals discomfort with this route and its implications for investor protections.
Grey Collett, general counsel at RexShares’ parent company REX Financial, responded by saying that the firm remains confident in its position. He stated that the funds will not be launched until they can satisfy the SEC’s requirements. The company continues to engage with the Commission to address the regulatory concerns surrounding the ETFs’ investment company classification.
Wider Implications for Staking ETFs
This development comes as the SEC has recently clarified that certain proof-of-stake activities are not considered securities. That clarification has added a layer of complexity to staking-related products. Other asset managers, including 21Shares, have also faced delays in seeking approval for staking features in their ETF proposals.
Bloomberg ETF analyst Eric Balchunas noted the aggressive strategy employed by RexShares, comparing it to previous cases involving fast-tracked or unusual ETF launches. He said the SEC appears unsupportive of this filing method. Fellow analyst James Seyffart added that more traditional filings are still likely to gain approval eventually.
