- SEC asks asset managers to amend S-1 and form 19b-4 filings
- Filings must detail in-kind redemptions and staking procedures
- Spot Solana ETFs could launch soon with regulator sign-off
The U.S. Securities and Exchange Commission (SEC) has signaled that exchange-traded funds (ETFs) tied to Solana may soon receive approval, following targeted requests for amendments to S-1 registration statements and form 19b-4 filings. Asset managers behind at least three proposed funds received direct feedback on two critical features: the mechanism for in-kind redemptions and the inclusion of staking rewards. These developments come eight months after the first spot Bitcoin and Ether ETFs were greenlit, marking a pivotal moment for the market’s sixth-largest cryptocurrency.
SEC Guidance on Revised S-1 Filings
In June 2025, multiple Wall Street firms were asked by the SEC to update their ETF prospectuses. The spotlight falls on how a Solana fund will process investor redemptions—whether through cash or by supplying the underlying SOL tokens. Traditional ETFs rely heavily on in-kind redemptions, a process in which authorized participants exchange large blocks of shares for the actual assets held by the fund. Applying this model to a digital token introduces challenges around custody, security protocols and settlement finality on the blockchain.
The filings in question also probe whether issuers will permit investors to stake their Solana tokens via the fund structure. Staking, a core feature of proof-of-stake networks such as Solana, allows participants to lock tokens to validate transactions and earn yields. The SEC’s queries aim to clarify if staking rewards will be credited back to the fund or distributed directly to shareholders, and how these yields align with regulatory definitions of income and security.
Handling In-Kind Redemptions for Solana ETFs
At issue is the practicality of in-kind redemptions within the crypto context. Under current proposals, an ETF issuer would need robust custodial solutions to safeguard SOL tokens, ensure timely blockchain confirmations and guard against potential forks or network outages. If redemptions occur in cash instead, investors may face tracking error relative to SOL’s spot price. The SEC’s requested amendments seek precise language on the chosen redemption path, with asset managers expected to detail the risk management policies for token transfers and reconciliation.
21Shares AG, one of the firms interviewed, confirmed that it plans to file an amended S-1 within days, demonstrating responsiveness to the regulator’s timeline. Two other issuers—unnamed but reported by Blockworks—are preparing similar updates. Together, these filings must articulate whether redemption baskets will contain SOL tokens or equivalent fiat, and outline procedures to maintain transparency and operational resilience.
Staking Features Under SEC Review
Staking yields currently exceed 5% for Solana, with data from Coinbase Global Inc. indicating an average reward north of that figure, compared to roughly 2% for Ether. The SEC’s staff is examining whether staking transforms the token into a security under federal law, since pooled staking operations can resemble investment contracts where participants expect profit. Fund issuers like REX Financial and Osprey Funds, which initially proposed staking-enabled ETFs for mid-June launches, were asked to justify whether their structures satisfy the Investment Company Act of 1940.
Regulators are pressing for clarity on how staking rewards accrue and whether the fund operator will act as a staking agent or pass through rewards on a pro rata basis. Any misalignment with securities law definitions could delay approval or impose additional custodial requirements, such as segregated accounts for yield distribution and real-time reporting of staking performance to investors.
Market Outlook After SEC Amendments
With at least seven firms—including Grayscale Investments LLC, Bitwise Asset Management, VanEck Asset Management and Canary Capital—vying for the first Solana ETF, market anticipation is high. Bloomberg Intelligence analysts James Seyffart and Eric Balchunas assign a 90% probability that a spot Solana ETF will launch before year-end, contingent on the SEC’s handling of 19b-4 filings. If the regulator grants approval on amended filings within weeks, the introduction of spot SOL ETFs could significantly expand institutional access, driving fresh capital into the sector.
The next steps involve the SEC completing its review of amended S-1 statements and related rule change proposals under form 19b-4. Once finalized, exchanges would list the new ETFs, offering investors regulated exposure to Solana without requiring self-custody. This evolution echoes the 2024 approvals for Bitcoin and Ether, which have since accumulated over $10 billion in combined assets under management. A Solana product could replicate this momentum, particularly for yield-seeking investors drawn by staking returns.
Conclusion
As the SEC refines its expectations for ETF structures, asset managers are poised to deliver comprehensive amendments addressing redemption mechanics and staking frameworks. Approval of Solana ETFs represents the next frontier in regulated crypto products, building on the regulatory blueprint established by earlier spot funds. With filing updates expected imminently and listing anticipated within weeks, investors may soon gain seamless, on-exchange access to the world’s sixth-largest cryptocurrency.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.
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