01.06.2025 07:08
The Securities and Exchange Commission (SEC) has issued a cease-and-desist order halting the launch of two proposed cryptocurrency exchange-traded funds (ETFs) focused on staking rewards. These ETFs, targeting Ethereum and Solana, had successfully navigated initial registration hurdles but were suddenly challenged by the SEC.
The SEC's Friday evening intervention targeted ETF Opportunities Trust, the registrar for funds managed by REX Financial and Osprey Funds. The Commission declared that the proposed ETFs might not comply with federal regulations defining legal investment companies, thus jeopardizing their potential listing on public exchanges. The ETFs sought to provide investors exposure to staking returns from Ethereum and Solana, distributing these rewards to shareholders. However, the SEC deemed the registration filings deficient, potentially misleading regarding the funds' legal standing.
Specifically, the SEC contested the funds' claim of conforming to the definition of an investment company, a crucial legal designation. In a Saturday letter, the SEC warned of potential further action to ensure compliance with federal securities laws if the discrepancies aren't rectified. Although the funds technically received effective registration on Friday, paving the way for immediate launch, this progression has been halted pending resolution.
The SEC's concerns appear to center on the funds' structural organization and the disclosures related to their staking activities. REX Financial's general counsel, Greg Collett, affirmed the firm's commitment to resolving the issues and delayed the launch indefinitely until SEC approval is secured. Initially aiming for a mid-June launch, REX Financial's founder, Greg King, now confirms a complete standstill. Bloomberg Intelligence ETF analyst, James Seyffart, speculated that the SEC's objection might be narrowly focused on the specific registration approach employed by REX. The future of these innovative staking ETFs remains uncertain, pending the outcome of the SEC's review and further clarification from the regulatory body.
