Solana stake ETF presents new opportunities, innovative structure raises regulatory follow

On July 3rd, the first Solana stake ETF was officially listed on the Chicago Options Exchange, and its first day performance exceeded market expectations. This ETF not only tracks the market price of Solana (SOL) but also provides investors with native staking rewards, managed jointly by two companies. The trading volume on the first day reached $33 million, with an inflow of $12 million, surpassing the early launched Solana futures ETF and XRP futures ETF.

One major innovation of this ETF is the provision of variable staking reward monthly dividends, with the current dividend rate at 7.3%. An ETF analyst commented that this is a "healthy trading start", noting that the trading volume reached $8 million within the first 20 minutes of listing.

Compared to the Solana futures ETFs that were launched earlier this year, this staking ETF performed more positively on its first day. The daily trading volume of several Solana futures ETFs launched in March was relatively low, indicating that market demand has not been effectively stimulated.

This new ETF is designed to meet the needs of various investors, including retail investors seeking exposure to cryptocurrencies, crypto-native investors supporting blockchain innovation, financial advisors looking for compliant blockchain income avenues, and institutional investors requiring ETF transparency.

It is worth noting that staking rewards are paid to the fund in physical form and increase its net asset value, which may result in taxable income for shareholders. Investors should consult professionals regarding relevant tax issues.

The ETF is registered as a "C corporation," which allows it to bypass the traditional ETF approval process and go public quickly. It chooses to register under the Investment Company Act of 1940 rather than the Securities Act of 1933. Although this structure speeds up the listing process, it also presents some challenges, particularly in terms of taxation.

Since staking rewards are considered ordinary income, the fund internally needs to pay corporate income tax, and investors also need to bear dividend tax and capital gains tax. This results in a higher overall tax burden, even though the fund's management fee is 0.75%.

Regulators have shown a certain degree of caution towards this innovative structure. Although the SEC has not raised significant obstacles to the application, its attitude towards C corporations circumventing traditional approval processes remains uncertain. This may pose challenges for the launch of similar funds in the future.

Some market observers point out that this structure may be more suitable for emerging crypto assets like Solana, rather than mature large assets like Bitcoin. At the same time, there are concerns that the ETF price may not accurately reflect the price movements of Solana.

Despite encountering some setbacks during the application process, the ETF was ultimately approved smoothly. This provides traditional investors with a new way to gain exposure to Solana through regular brokerage accounts and enjoy staking returns.

Currently, multiple companies are vying to launch Solana spot ETFs, and these funds are expected to gain approval within two to four months. Meanwhile, at least 60 other cryptocurrency ETF proposals are awaiting regulatory review. This indicates that competition in the crypto ETF market is intensifying, and more innovative products may emerge in the future.