SEC Throws Cold Water on Crypto Staking ETFs—Solana and Ether Funds in Regulatory Crosshairs

The U.S. Securities and Exchange Commission just fired a warning shot at proposed staked Solana and Ether ETFs—because nothing says ’innovation’ like regulatory roadblocks.

Here’s the kicker: The SEC isn’t buying the ’staking-as-a-service’ pitch, questioning whether these funds should even qualify as ETFs. Classic case of old-school finance struggling to keep up with blockchain’s yield-generating mechanics.

Meanwhile, crypto natives shrug—after all, who needs Wall Street’s stamp of approval when you can just stake directly? Another day, another bureaucratic speed bump for an industry that’s already racing ahead.

SEC Flags Compliance Issues in Proposed ETF Structures

The SEC staff said they continue to have unresolved questions about whether the proposed funds, if structured and operated as planned, meet the definition of an “investment company” under the Investment Company Act, according to a letter dated May 30.

The letter further warned that disclosures about the funds’ investment company status “may be potentially misleading.”

Despite the regulatory pushback, analysts remain hopeful. “REX lawyers say they can work it out,” Bloomberg ETF analyst Eric Balchunas noted in a May 31 post on X.

“Issuers are pushing the envelope hard in an effort to get first to market.”

Update: SEC sent letter to REX last night saying it was concerned SEC improperly filed. REX lawyer says they can work it out. Feels a bit like the $PRIV situation. Issuers pushing envelope hard in effort to get first to mkt. Saturday scoop from @isabelletanlee https://t.co/6fnYf5Oo2V pic.twitter.com/NHTvOQyDsO

Market participants are closely tracking the progress of altcoin and staking-based ETFs, viewing them as a potential gateway for fresh institutional capital to enter the crypto sector.

The SEC’s caution comes even after it clarified earlier this year that crypto staking, in itself, does not constitute a securities transaction.

Still, the agency has delayed rulings on several staking and altcoin ETF applications.

These delays are not unexpected. “Almost all of these filings have final due dates in October,” Bloomberg analyst James Seyffart wrote.

“It is uncommon for ETF applications to be approved so early.”

BlackRock’s Bitcoin ETF Sees Record $430M Outflows

As reported, BlackRock’s iShares Bitcoin Trust (IBIT) recorded $430.8 million in outflows on May 30, ending a 31-day inflow streak — its longest since launch.

The MOVE marks IBIT’s largest single-day outflow to date, according to Farside data, following a month where BlackRock added $6.2 billion in Bitcoin.

Despite the pullback, IBIT’s total bitcoin holdings now stand at around $70 billion.

The outflows were part of a broader trend across U.S. spot Bitcoin ETFs, which saw $616.1 million in net redemptions on May 30 — the second consecutive day of outflows.

The previous day had seen $346.8 million withdrawn. Notably, BlackRock was the only issuer to post inflows on May 29, even as others saw redemptions.