### REX Shares and Osprey Funds to Launch Staking ETFs Backed by Ethereum and Solana

In a significant development for the cryptocurrency investment sector, REX Shares and Osprey Funds announced plans to introduce "staking ETFs" that will reward holders with tokens while tracking Ethereum and Solana assets. The announcement follows a filing with the U.S. Securities and Exchange Commission (SEC) as per the firm's SEC Form N-1A, the registration form for open-end management companies to offer mutual and exchange-traded funds to the public.

According to the filing, the ETH and SOL funds will allocate "at least 80%" of their net assets to their respective cryptocurrencies, Ethereum (ETH) and Solana (SOL). Moreover, each fund will stake "at least 50%" of their holdings, integrating a vital component of decentralized finance into the ETF structure. Anchorage Digital will provide custodial support for these funds, as confirmed by its CEO, Nathan McCauley.

"Staking is the next chapter in the crypto ETF story. The launch of crypto staking ETFs marks a win for consumers and a significant step forward in full access to the crypto ecosystem," McCauley said. He also pointed out the groundbreaking nature of the collaboration with REX Shares, emphasizing that Anchorage Digital is proud to support these ETFs as the only federally chartered bank approved for staking.

ETF adoption in cryptocurrency investments surged after the SEC approved the first class of spot Bitcoin ETFs in early 2024. These Bitcoin ETFs, such as BlackRock's IBIT Bitcoin ETF, became some of the best-performing assets in the market. However, despite other crypto-related ETF approvals, the SEC has been hesitant to green-light products allowing issuers to stake underlying holdings for revenue.

In the backdrop of President Donald Trump's election, industry advocates and lobbyists have been engaging with federal regulators to clarify the rules around staking, focusing on fund approval and tax implications of staking rewards. The Jito Foundation, for example, was among the first to engage in direct discussions with the SEC's crypto task force about these issues.

Staking in proof-of-stake systems involves users locking up their assets to ensure network security and in return, they receive rewards. This revenue model is increasingly pivotal for custodians like Anchorage, with companies like BitGo reporting nearly half of their business dominated by staking services.

REX-Osprey clarifies that, if approved, the new funds will be treated as regular C corporations for U.S. federal income tax purposes rather than regulated investment companies. This means staking rewards distributed to holders will be taxed as dividend income.

"All of this, assuming they launch in near future, is a bunch of clever legal and regulatory work-arounds to get these products to market," Bloomberg Intelligence analyst James Seyffart commented, suggesting possible future improvements in the structure of such investment vehicles.

It's noteworthy that the SEC has yet to approve even a non-staking spot Solana ETF, although several firms have applied. In March, the CME's listing of SOL futures was seen by some experts as a potential step towards a spot fund approval. Bloomberg's Eric Balchunas has indicated that REX-Osprey's approach could expedite market entry.

The ETH and SOL funds will carry annual operating expenses of 1.28% and 1.4%, respectively, outlining the cost structure for interested investors.

With these developments, REX Shares and Osprey Funds are poised to pave the way for broader acceptance and integration of staking within conventional financial frameworks, marking a new era for crypto ETFs.