This week, REX Shares officially confirmed that it will launch the Solana Staking ETF 'REX-Osprey SOL+Staking ETF' on Wednesday (July 2), which is the first staking cryptocurrency ETF in the United States. The launch of this ETF symbolizes the further integration of cryptocurrency with traditional finance, introducing staking into the ETF investment industry, providing investors with a dual value proposition of 'asset price exposure + staking income.'
Shortly after the news release last night, the SOL price briefly rose over 6% approaching $160, currently retreating to around $153. JTO briefly surged over 8%, once nearing $2.5. Although SOL and JTO have currently erased most of their gains, it also highlights the market's high attention to this product.
Who is launching it? What service providers are involved?
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 options-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 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 that subsidiary.
Apart from the issuer, service providers for this ETF fund include:
Fund Investment Advisor: REX Advisers, LLC. Matthew Pelletier serves as the portfolio manager of this fund, responsible for its daily investment management. REX Advisers has held fixed income sales and trading positions at BNP Paribas, Western Bank, and Susquehanna International Group.
Commonwealth Fund Services, Inc. serves as the fund manager, overseeing fund operations.
U.S. Bank provides certain financial management services (excluding services provided by the manager) and fund accounting services.
U.S. Bank National Association serves as the ETF custodian for the fund, responsible for holding the fund's cash and securities issued for the ETF, settling transactions of non-Solana assets, and collecting income from the fund's investments.
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 of 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 strategy of this ETF is as follows:
Core Investment Objective: The fund aims to provide investors with exposure to Solana assets and an additional source of income 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 other ETFs, including non-U.S. cryptocurrency ETFs, that provide similar exposure to Solana.
Staking Strategy: The fund will seek to stake at least 50% of the Solana it holds 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 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, brokers) for the issuance or redemption of large units (Creation Units, with at least 25,000 shares per unit). Individual shares can only be bought and sold through brokers on national securities exchanges.
Tax Rules: Taxed as a regular C corporation
Unlike most ETFs, due to the limited number of holdings of the fund, it will not be taxed as a regulated investment company under U.S. federal income tax, but rather will be taxed as a regular C corporation. It is worth noting that C corporations are subject to double taxation; corporate profits are taxed at the corporate tax rate, and dividends distributed to shareholders are taxed again at personal income tax rates.
I. Fund Level
Capital Gains Tax: When the fund sells or disposes of these securities in another way, the accumulated securities gains within the fund will be taxed at the fund level, and the income is 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, an excise tax (1% on the excess) will be levied.
Accumulated Earnings Tax: If the fund does not distribute enough profits to shareholders, it may incur an additional tax of 20% (on retained earnings).
II. Investor / Holder Level
1. Tax Treatment of Dividend Income
Dividend Tax: If dividends come from the fund's current or accumulated profits, they are taxed at the dividend tax rate.
Corporate Investors: Eligible investors can enjoy dividend deductions.
Individual Investors: When holding period requirements are met, they may qualify for long-term capital gains tax rates (lower than regular income tax rates).
2. Tax Treatment of Share Sales or Creation Units Redemption
Capital Gains Tax
Hold for over 1 year: Long-term capital gains (lower tax rate).
Hold for ≤ 1 year: Short-term capital gains (taxed at ordinary income tax rates).
Fee Structure
According to the registration documents, the following expense standards are mentioned:
Advisory Fees: The fund advisor REX Advisers, LLC is entitled to charge an annual management fee of 0.75%. This fee is calculated daily based on the percentage of the fund's average daily net assets and 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 percentages are not mentioned.
Financial Management and Fund Accounting Fees: Paid to U.S. Bank based on an annualized percentage of the fund's total net assets. Specific fee percentages are not mentioned.
What is the impact?
The approval of the Solana Staking ETF by regulatory authorities indicates a shift in attitude towards crypto staking economics from 'cautious observation' to 'limited acceptance.' This breakthrough releases two major signals to the market:
Compliance Framework Prototype Emerges: The SEC's approval of staking products indicates that the path for the integration of crypto assets with traditional financial instruments has been opened, and the approval of similar products (such as Ethereum staking ETFs) is expected to accelerate.
Market Confidence Boost: Institutional investors have significantly higher recognition of compliant products compared to unregulated crypto assets, and the launch of this ETF may attract long-term funds such as pensions and mutual funds.
Additionally, the launch of this ETF will further solidify the fundamentals of the Solana ecosystem:
Structural Increase in SOL Demand: The fund allocates at least 80% of its assets directly to SOL, which may lead to significant buying pressure.
Over 50% of holdings entering on-chain staking, the increase in staking rates will raise the 'opportunity cost of holding' SOL.
The combination of staking mechanisms and ETFs symbolizes TradFi's acceptance of cryptocurrency economic models, potentially driving more mainstream capital into the Solana staking market through compliant channels. At the same time, it will also create favorable conditions for staking protocols within the Solana ecosystem.
The increase in staking rates will further solidify the decentralized foundation of Solana.
Of course, the 'REX-Osprey SOL+Staking ETF' document also highlights various risks, such as SOL investment risks, regulatory risks related to SOL, risks of the overall digital asset industry, staking risks, liquidity risks, concentrated investment risks, cybersecurity risks, and custody risks.
It is noteworthy that the fund manager Commonwealth Fund Services has simultaneously applied for the REX-OSPREY ETH+STAKING ETF in the documents filed with the SEC, and the investment strategies of the Ethereum staking ETF and the Solana staking ETF are similar, with the market expecting the launch of the Solana staking ETF to pave the way for the Ethereum staking ETF.
This article is reprinted with permission from: (Foresight News)
Original Title: (The First SOL Staking ETF in the U.S. is Launched! Is the Era of Institutional Compliance and Easy Profits Beginning?)
Original Author: KarenZ, Foresight News
'The First SOL Staking ETF in the U.S. is Here! Who are the Service Providers? Is the Era of Institutional Compliance and Easy Profits Beginning?' This article was first published in 'Crypto City'.
