REX Shares Files For $SOL Staking ETFs, Faces SEC Pushback

On May 30, REX Shares filed a registration statement with the Securities and Exchange Commission (SEC) for new Ethereum and Solana ETFs that plan to distribute staking rewards directly to investors. Unlike the recently approved spot Ethereum ETFs, which are set to begin trading without staking, these funds propose staking $SOL and $ETH to earn network rewards.

The fund issuer has taken a novel approach, marking the filing as "effective," indicating that the SEC has not prevented the registration statement from becoming active. However, this designation does not guarantee that the funds can be listed or traded on the market. The SEC must still approve the listing and ensure the products comply with ETF-specific regulations, particularly if they do not meet the requirements of traditional ETFs under the Investment Company Act of 1940.

How Do these Staking ETFs Work?

REX Financial Group (REX Shares) has filed an effective prospectus for two new exchange-traded funds, one tracking Ether ($ETH) and one tracking Solana ($SOL), that explicitly incorporate blockchain staking rewards. Each fund is structured as a “non-diversified” open-end investment company under the Investment Company Act of 1940 with a dedicated Cayman Islands feeder subsidiary.

For example, the REX-OspreyTM SOL + Staking ETF will hold $SOL and delegate a portion of those holdings to one or more validators on Solana’s Proof of Stake network. According to the prospectus, the fund will stake at least 50 percent of its $SOL holdings and earn transaction fee rewards in $SOL. After deducting custodian and validator fees, all staking rewards will be returned to the fund and distributed to shareholders.

Both Solana and Ethereum staking funds primarily invest in the underlying crypto assets and may allocate up to 50 percent of their assets to other crypto ETFs abroad. The funds use a Cayman Islands subsidiary, referred to as the “ETH Subsidiary” or “SOL Subsidiary,” as the legal holder of the tokens.

Both funds will list on Nasdaq (tickers ESK for $ETH and SSK for $SOL) once final approvals are in place. 

SEC Review

The filings drew significant scrutiny from the SEC. Between January and May 2025, ETF Opportunities Trust exchanged multiple comment letters with the SEC staff. These discussions led to substantial revisions to the funds’ structure and disclosures. Before the registration became effective, the SEC informed ETF Opportunities Trust that it still had questions and concerns about the proposed structure and operations of the funds and asked that the funds delay the effectiveness of the registration statement.

In a letter dated May 30, 2025, the SEC staff noted that, despite multiple submissions, particular concerns remained unresolved as the funds became effective. Commission staff explicitly warned they “continue to have unresolved questions whether the Funds…would be able to meet the definition of ‘investment company’ under the Investment Company Act”.

In practical terms, the SEC questioned whether a staking-based crypto fund could satisfy the 1940 Act’s requirements. Under U.S. law, a fund must be “primarily engaged” in investing in securities (or hold 40% of its assets in “investment securities”) to qualify as an investment company. Because $ETH and $SOL may not be universally deemed securities, the SEC staff asked whether these ETFs, with their staking components, are structured to hold securities predominantly.

The staff also flagged that the funds “may have improperly filed their registration statement on Form N-1A” (the form reserved for registered investment companies). In that case, the funds might not satisfy the exchange’s generic ETF listing standards. The SEC letter warned that if these issues remain unresolved, “the Commission staff will consider the appropriate next steps” to enforce the securities laws. 

These comments were just one day after the SEC staff released guidance clarifying that certain forms of crypto staking, such as self-staking or custodial staking, generally do not involve the offer or sale of securities. The contrast between this guidance and the SEC’s continued questions about the funds has led observers to highlight a perceived inconsistency in the agency’s approach.

Expert Commentary

Industry experts have been closely watching the filings. Bloomberg Intelligence analyst James Seyffart noted that REX’s structure was “a bunch of clever legal and regulatory work-arounds” to expedite the product.

By utilizing a 1940 Act open-end fund with an offshore subsidiary, REX Shares could achieve an effective SEC registration without undergoing the traditional exchange filing process (Form 19b-4) typically required for ETFs.

Nate Geraci, president of The ETF Store, commented that this seems to be the case of an issuer testing “regulatory boundaries on crypto-related ETFs.” He added that he expects the SEC to approve spot $SOL ETFs still and permit staking in both $ETH and $SOL ETFs later this year.

What Comes Next?

Despite their effective status, the funds cannot launch until exchanges file rule-change proposals and the SEC grants final approval. Given the SEC’s hesitations and its ongoing scrutiny of staking as a service, this process could take months or stall entirely.

REX Shares will likely need to address outstanding questions around transparency, custody, reward distribution mechanics, and investor protections. The SEC’s stance on whether staking creates an "investment contract" also looms large.

Still, the filings mark a bold experiment. Whether regulators approve them or not, REX Shares has laid down a challenge: can public markets evolve to support blockchain-native yields?

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