SEC Throws Cold Water on Crypto Staking ETFs—Regulators Aren’t Buying the Hype

The U.S. Securities and Exchange Commission just slammed the brakes on staking-based ETFs, signaling deeper scrutiny for crypto’s favorite yield trick. No more free passes—Wall Street’s watchdog is finally asking the hard questions.

Why the sudden chill? The SEC’s latest move exposes the regulatory gray zone around staking rewards. Turns out, calling something ’passive income’ doesn’t magically make it compliant. Who knew?

Meanwhile, crypto VCs are already spinning this as ’healthy scrutiny’—because nothing says ’healthy’ like your entire business model getting side-eyed by the feds. Stay tuned for the inevitable pivot to ’alternative compliance frameworks’ (read: creative paperwork).

SEC flags ETF structure and staking disclosures

Greg Collett, general counsel at REX Financial, said the firm isn’t backing away. “We think we can satisfy the SEC on the investment company question, and we don’t intend to launch the funds until we do that.” REX had hoped to get the products trading by mid-June, according to Greg King, the firm’s founder. Now, everything is paused until the SEC gives a clear go-ahead.

James Seyffart, an ETF analyst at Bloomberg Intelligence, said the Commission’s objection may be specific to the filing strategy REX used. “Even if the SEC doesn’t allow this structure to list, we still believe the more straightforward attempts to allow staking in a US ETF will ultimately be successful,” he said. “It’s a matter of when, not if. But the SEC doesn’t seem to be a fan of the way Rex tried to push these listings through.”

This is the second time in just a few months that the SEC has stepped in after a fund tried to go public with a structure it didn’t like. In March, the agency publicly pushed back on a private credit ETF managed by State Street Corp. and Apollo Global Management — the first of its kind — only hours after it listed. That product had to deal with similar regulatory issues around classification.

The new staking ETFs attempt to blend traditional investment products with crypto-native features like yield from validating transactions. But the SEC doesn’t consider staking returns to be straightforward income, and is clearly uncomfortable with listing a product that generates money in a way they don’t fully regulate. The legal uncertainty around staking continues to block more complex crypto offerings.

Bitcoin ETFs attract billions while gold-backed funds bleed

As the SEC slams the brakes on staking products, Bitcoin ETFs are pulling in serious capital. Over the past five weeks, US Bitcoin ETFs have seen more than $9 billion in inflows, led by BlackRock’s iShares Bitcoin Trust (IBIT). On the flip side, gold ETFs have been bleeding money — losing more than $2.8 billion in the same timeframe.

This comes as bitcoin hit an all-time high of $111,980 earlier this month. That rally followed positive movement on regulatory issues — especially new momentum around a stablecoin bill — and mounting concern over the United States’ fiscal position under President Donald Trump’s second term.

Investors are seeing Bitcoin as a hedge, not just a bet. Even though Gold is still up more than 25% for the year, it’s down nearly $190 from recent highs.

Some analysts see this shift as long-term. Christopher Wood, global equity strategist at Jefferies, said, “I remain bullish on both gold and Bitcoin. They remain the best hedges on currency debasement in the G7 world.” But others aren’t convinced Bitcoin can be counted on during market stress.

Critics point out that during major events — like the August unwinding of the yen carry trade — Bitcoin dropped sharply alongside other risky assets. That kind of volatility continues to make the SEC wary of expanding crypto exposure through mainstream investment products like ETFs.

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