Original Title: "The First SOL Staking ETF in the U.S. is Launched! The Era of Institutional Compliance and Easy Profits Begins"
Original Author: KarenZ, Foresight News
This week, REX Shares officially confirmed the launch of the Solana staking ETF "REX-Osprey SOL+Staking ETF" on Wednesday (July 2), marking the first staking cryptocurrency ETF in the United States. The launch of this ETF signifies further integration of cryptocurrency with traditional finance, introducing staking into the ETF investment space and providing investors with a dual value proposition of "asset price exposure + staking returns."
Shortly after the announcement last night, the price of SOL briefly surged over 6%, approaching $160, and has since retreated to around $153. JTO briefly rose over 8%, nearing $2.5. Although SOL and JTO have essentially erased all their gains, it highlights the market's high interest in 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 its Solana shares through a subsidiary registered in the Cayman Islands, REX-Osprey (TM) SOL + Staking (Cayman) Portfolio SP. The fund fully owns and controls this subsidiary and will consolidate its investments with that subsidiary.
In addition to 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 its daily investment management. REX Advisers has held fixed income sales and trading positions at BNP Paribas, Western Alliance Bank, and Susquehanna International Group.
· Commonwealth Fund Services, Inc. serves as the fund administrator, overseeing the fund's operations.
· U.S. Bank provides certain financial management services (excluding those provided by the administrator) and fund accounting services.
· U.S. Bank National Association serves as the ETF custodian for the fund, responsible for safeguarding and holding the fund's cash as well as the securities and other non-Solana asset securities issued by the ETF, settling non-Solana asset transactions, 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 the fund's Solana assets and LST transactions, and collecting staking rewards.
· Foreside Fund Services LLC is responsible for distribution, acting as an agent to distribute the fund's creation units.
Fund Strategy Details: From Asset Allocation to Staking Allocation
The main investment strategy of the 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 returns through on-chain staking.
· Asset Allocation: According to the documents filed with the SEC, under normal market conditions, the fund will invest at least 80% of its net assets in Solana or assets that provide exposure to Solana. 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 Solana and are subject to lock-up periods.
· Trading of Fund Shares: The fund is only open to certain 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 bought and sold through brokers on national securities exchanges.
Tax Rules: Taxed as a Regular C Corporation
According to the documents filed with the SEC, unlike most ETFs, the fund will not be taxed as a regulated investment company due to its limited number of holdings; instead, it will be taxed as a regular C corporation. It is important to emphasize that C corporations are subject to double taxation, where corporate profits are first taxed at the corporate tax 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 internally accumulated securities gains will be taxed at the fund level, and the gains will be taxed at the corporate tax rate (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 imposed.
· Accumulated Earnings Tax: If the fund does not distribute sufficient profits to shareholders, it may be subject to an additional 20% tax (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 corporate investors may enjoy a dividend deduction.
· Individual Investors: If holding period requirements are met, long-term capital gains tax rates (lower than ordinary income tax rates) may apply.
2. Tax on Sale of Shares or Redemption of Creation Units
· Capital Gains Tax
Holding for more than 1 year: Long-term capital gains (lower tax rate).
Holding for ≤1 year: Short-term capital gains (taxed at ordinary income tax rate).
Fee Structure
According to the registration documents, some mentioned fee standards are:
· Advisory Fee: 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 paid monthly.
· Fund Management Fees: Fees for the fund administrator 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 the annualized percentage of the fund's total net assets. Specific fee percentages are not mentioned.
What are the Implications?
The approval of the Solana staking ETF by regulatory authorities indicates a shift in attitude towards the crypto staking economy from "cautious observation" to "limited acceptance." This breakthrough releases two major signals to the market:
· Emergence of a Compliance Framework: The SEC's approval of staking products means that the integration path for crypto assets with traditional financial instruments has been opened, and the approval of similar products (such as Ethereum staking ETFs) is expected to accelerate.
· Boost in Market Confidence: Institutional investors have significantly higher recognition 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.
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 substantial buying pressure.
· Over 50% of Holdings Entering On-Chain Staking: The increase in staking rate will raise the "opportunity cost of holding" SOL.
· The combination of staking mechanisms with the ETF signifies the acceptance of the crypto economic model by TradFi, potentially driving more mainstream funds into the Solana staking market through compliant channels. Meanwhile, it will also benefit Solana's ecosystem staking protocols.
· The increase in staking rates will further strengthen Solana's decentralized foundation.
Of course, the "REX-Osprey SOL+Staking ETF" documents also highlight various risks, such as SOL investment risks, regulatory risks related to SOL, risks in the overall digital asset industry, staking risks, liquidity risks, concentration investment risks, cybersecurity risks, and custody risks.
It is noteworthy that the fund administrator Commonwealth Fund Services has also applied for the REX-OSPREY ETH + STAKING ETF in the documents filed with the SEC, indicating that the investment strategies of the Ethereum staking ETF and the Solana staking ETF are similar, and the market expects that the launch of the Solana staking ETF may pave the way for the Ethereum staking ETF.
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