Written by: KarenZ, Foresight News
This week, REX Shares officially confirmed that it will launch the Solana staking ETF 'REX-Osprey SOL+Staking ETF' on Wednesday (July 2), marking the first staking cryptocurrency ETF in the U.S. The launch of this ETF symbolizes further integration of cryptocurrency with traditional finance, bringing staking into the ETF investment space and providing investors with a dual value logic of 'asset price exposure + staking returns.'
Shortly after the news release last night, the price of SOL briefly rose over 6%, approaching $160, and has now retreated to around $153. JTO briefly rose over 8%, nearing $2.5. Although SOL and JTO have nearly erased all their gains, it highlights the market's high attention to this product.
Who launched it? What service providers are there?
The fund code for the 'REX-Osprey SOL+Staking ETF' is SSK, jointly launched by REX Shares and Osprey Funds.
REX Shares is an innovative ETP provider focused on alternative strategy ETFs and ETNs, known for its MicroSector and T-REX product lines, offering traders leveraged and inverse tools, and has recently launched a series of option-based income strategies.
Osprey Funds was established in 2019 as the cryptocurrency division of REX Shares and became an independent company in 2021. The team has launched over 100 exchange-traded products and invested in Bitcoin as early as 2013.
The fund may indirectly hold all or part of its Solana shares by investing in a subsidiary registered in the Cayman Islands, REX-Osprey (TM) SOL + Staking (Cayman) Portfolio SP. The fund wholly owns and controls this subsidiary and will consolidate its investments with this subsidiary.
Aside from the issuer, the service providers for this ETF include:
Fund Investment Advisor: REX Advisers, LLC. Matthew Pelletier serves as the portfolio manager for this fund, responsible for the daily investment management. REX Advisers has previously held fixed income sales and trading positions at BNP Paribas, Western Alliance Bank, and Susquehanna International Group.
Commonwealth Fund Services, Inc. acts as the fund manager, overseeing the fund's operations.
U.S. Bank provides certain financial management services (excluding those provided by the manager) and fund accounting services.
U.S. Bank National Association serves as the ETF custodian for the fund, responsible for safeguarding the fund's cash and securities issued by the ETF, settling non-Solana asset transactions, and collecting investment income for the fund.
Anchorage Digital Bank National Association serves as the cryptocurrency custodian for the fund, responsible for safeguarding the fund's cash, Solana holdings, and LST, settling transactions involving the fund's Solana assets and LST, and collecting staking rewards.
Foreside Fund Services LLC is responsible for distribution, acting as an agent to distribute the fund's additional shares (Creation Units).
Fund strategy details: From asset allocation to staking allocation
The main investment strategies of this ETF are as follows:
Core Investment Objective: The fund aims to provide investors with exposure to Solana assets and an additional source of returns by tracking the price performance of Solana and generating income through on-chain staking.
Asset Allocation: According to the documents filed with the U.S. Securities and Exchange Commission (SEC), the fund will invest at least 80% of its net assets in Solana or assets that provide exposure to Solana under normal market conditions. The fund may also invest in shares of other ETFs, including non-U.S. cryptocurrency ETFs that offer similar exposure to Solana.
Staking Strategy: The fund will seek to stake at least 50% of its Solana holdings to generate income and achieve capital appreciation. Specifically, the fund will instruct Solana custodians to delegate a portion of the SOL held by the fund (as determined by the advisor) to one or more validators. Rewards will be paid in the form of Solana and are subject to a lock-up period.
Trading of Fund Shares: The fund is only open to specific institutional investors (such as market makers and brokers) for the issuance or redemption of shares in large units (Creation Units, with a minimum of 25,000 shares per unit). Individual shares can only be traded through brokers on national securities exchanges.
Tax rules: Taxed as a regular C corporation
According to the filed documents with the SEC, unlike most ETFs, due to the limited number of shares held by the fund, it will not be taxed as a regulated investment company for U.S. federal income tax purposes; instead, it will be taxed as a regular C corporation. It is important to emphasize that C corporations are subject to double taxation: corporate profits are first taxed at the corporate rate, and then dividends distributed to shareholders are taxed again at the individual income tax rate.
1. Fund Level
Capital Gains Tax: When the fund sells or otherwise disposes of these securities, the capital gains accumulated within the fund will be taxed at the fund level, with earnings subject to corporate tax rates (federal + state tax).
Excise Tax: If the total market value of shares redeemed by the fund in a tax year exceeds $1 million of the total market value of issued shares, an excise tax will be due (1% on the excess).
Accumulated Earnings Tax: If the fund fails to distribute sufficient profits to shareholders, it may be subject to an additional tax of 20% (on retained earnings).
2. Investor / Holder Level
1. Tax treatment of dividend income
Dividend Tax: If dividends come from the fund's current or accumulated profits, they will be taxed at the dividend tax rate.
Corporate investors: Eligible investors can enjoy dividend deductions.
Individual investors: When the holding period requirement is met, long-term capital gains tax rates may apply (lower than ordinary income rates).
2. Taxation of share sales or Creation Units redemptions
Capital Gains Tax
Hold for more than 1 year: Long-term capital gains (lower tax rate).
Hold for ≤ 1 year: Short-term capital gains (taxed at ordinary income rates).
Fee Structure
According to the registration documents, some mentioned fee standards are:
Advisor Fees: The fund advisor REX Advisers, LLC is entitled to charge an annual management fee of 0.75%. This fee is calculated daily as a percentage of the fund's average daily net assets and is paid monthly.
Fund Management Fees: Fees for the fund manager Commonwealth Fund Services, Inc. are calculated based on the fund's average daily net assets, accrued daily, and paid monthly. Specific fee ratios are not mentioned.
Financial Management and Fund Accounting Fees: Paid to U.S. Bank based on the annualized rate of the fund's total net assets. Specific fee ratios are not mentioned.
What are the implications?
The approval of the Solana staking ETF indicates a shift in regulatory agencies' attitudes toward the cryptocurrency staking economy from 'cautious wait-and-see' to 'limited acceptance.' This breakthrough signals two major messages to the market:
Compliance framework emerging: The SEC's approval of staking products signifies that the integration path between crypto assets and traditional financial instruments has been opened, and the approval process for similar products (like Ethereum staking ETFs) is expected to accelerate.
Market confidence boost: Institutional investors exhibit significantly higher acceptance of compliant products compared to non-custodial crypto assets, and the launch of this ETF may attract long-term funds such as pensions and mutual funds.
In addition, the launch of this ETF will further solidify the fundamentals of the Solana ecosystem:
Structural increase in SOL demand: The fund will allocate at least 80% of its assets directly to SOL, which could lead to substantial buying pressure.
More than 50% of the holdings will enter on-chain staking, and the increase in staking rates will raise the 'opportunity cost of holding' SOL.
The combination of the staking mechanism and ETF marks the acceptance of the cryptocurrency economic model by traditional finance, potentially driving more mainstream capital to enter the Solana staking market through compliant channels. At the same time, it will also benefit Solana's ecosystem staking protocols.
The increase in staking rates will further solidify the decentralized foundation of Solana.
Of course, the 'REX-Osprey SOL+Staking ETF' documents also highlight potential risks, such as SOL investment risks, regulatory risks related to SOL, risks of the digital asset industry as a whole, staking risks, liquidity risks, concentration investment risks, cybersecurity risks, custody risks, etc.
It is noteworthy that the ETF fund manager Commonwealth Fund Services has simultaneously applied for the REX-OSPREY ETH + STAKING ETF in the documents filed with the SEC, indicating that the investment strategies for the Ethereum staking ETF and the Solana staking ETF are similar, and the market expects that the approval of the Solana staking ETF may pave the way for the Ethereum staking ETF.
