Grayscale is a cryptocurrency asset manager who joined yesterday’s Solana ETF.
NYSE Arca has filed a form 19b-4 notifying SEC of its intention to list and exchange shares in Grayscale’s Solana Trust. Grayscale’s entry means that only BlackRock Fidelity ProShares Ark and Ark remain among major crypto-ETF issuers who have not yet filed for Solana DLTs. These prospective Solana ETF sellers may all have a weakness. The ETFs are not currently offered with stake rewards.
This omission isn’t necessarily by choice — SOL ETF issuers followed the precedent set by ether ETFs, which excluded staking rewards to comply with SEC guidelines. Unknown are the details of discussions between ETF issuers, the SEC and other parties. The SEC may have been concerned that staking rewards were classified as securities due to the possibility of reducing the risks associated with staked ETH.
When firms began filing for Solana’s ETFs they did not include staking in the initial application. Issuers told me repeatedly that staking is not rewarded in the Solana ETFs, despite the fact they are regulated and provide direct exposure to Solana price movements.
Solana has a much higher opportunity cost than Ethereum to eliminate staking. Ethereum Foundation reports that the current APR of staking for Ethereum is 3.4%. Data from 21.co shows that Solana has had an average APR of 11.4% over the past seven days. SOL’s average staking return isn’t that high. But even when August was a bit of a down month, it still yielded over 8%.
SOL ETFs would suffer from Solana Inflation if there were no staking incentives. Validators get tokens when they run the blockchain. Dan Smith explained in a recent Lightspeed podcast that token emissions are then passed on to Solana stakeholders via staking incentives, meaning only those who do not stake lose out.
Leah Wald is the CEO of Sol Strategies. She said Solana appeals to more than staking, noting that “staking is undeniably a value-add.” Sol Strategies is a publicly-traded company in Canada that stakes Solana. It also runs a Solana validater.
It could change, as Donald Trump’s nominee for SEC chairman Paul Atkins may be more flexible with issuers. He might even allow stake rewards to remain in the applications. Todd Ruoff is the CEO of Autonomys – a decentralized AI firm. He said Trump’s Administration will be more lenient on issuers and allow staking rewards to stand in applications. “likely to approve staking options in the near future.”
It’s not guaranteed that this will happen. So, in essence, investors are asking: Are they willing to accept a lower return of 10% to gain access to an investment package that is regulated?
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
