Grayscale Files for Solana ETF Without Staking Rewards
The crypto asset manager Grayscale filed a 19b-4 form with NYSE Arca to list and trade shares of its Solana Trust, joining the Solana ETF landscape. Major issuers like BlackRock, Fidelity, ProShares, and Ark have yet to file for Solana ETFs. A key issue is that these proposed ETFs would not provide staking rewards.
This decision aligns with precedents set by ether ETFs, which also excluded staking rewards to adhere to SEC guidelines. The SEC's concerns likely involve classifying staking rewards as securities and potential slashing risks associated with staked ETH.
As a result, Solana ETF issuers opted out of including staking from the outset. Despite this omission, some issuers believe regulated exposure to Solana’s price action remains attractive. However, the opportunity cost of excluding staking is significant for Solana, where the average staking APR has been 11.4%, compared to Ethereum's 3.4%. Even during lower yield periods in August, Solana yielded over 8%.
The absence of staking rewards could dilute SOL ETF buyers due to Solana inflation, which occurs when validators receive tokens for blockchain operations. Token emissions benefit stakers, leaving non-stakers vulnerable to value loss from inflation.
Leah Wald, CEO of Sol Strategies, acknowledged that while Solana's appeal extends beyond staking yield, staking does add value. Sol Strategies operates a Solana validator and stakes Solana.
Future developments may change this landscape if regulatory attitudes shift under potential SEC chair nominee Paul Atkins. Todd Ruoff, CEO of Autonomys, suggested that the Trump Administration might approve staking options soon.
The current dilemma for investors in Solana ETFs is whether they will accept a 10% lower return for access to a regulated investment vehicle.