SEC Raises Concerns Over Ethereum and Solana ETFs From REX-Osprey

The U.S. Securities and Exchange Commission (SEC) has raised red flags over two proposed crypto ETFs tied to Ethereum (ETH) and Solana (SOL), warning they may not meet the legal definition of an investment company under the Investment Company Act of 1940. In a letter to ETF Opportunities Trust—issuer of the REX-Osprey ETH and SOL ETFs—the SEC noted unresolved concerns about the structure and compliance of the funds, particularly their inclusion of crypto staking components.

Filed on January 21, the ETFs were part of a broader registration statement that also covered products linked to Bitcoin, XRP, Dogecoin, BONK, and the TRUMP meme coin. Although the registration became effective on May 30, the ETFs are not yet listed or launched.

The SEC argued that the funds might not qualify as investment companies, which is a legal requirement for ETFs registered under Form N-1A. To meet the definition, over 40% of a fund’s total assets must consist of investment securities or its core activities must involve investing or trading in securities. The SEC also questioned whether the ETFs meet the operational requirements of Rule 6c-11, which enables ETF listings without special exemptions.

Adding to the regulatory uncertainty, the SEC recently issued new guidance stating that most crypto staking—particularly self and custodial staking—is not subject to securities laws. However, this nonbinding guidance sparked internal debate, with Commissioner Caroline Crenshaw warning it may create more legal ambiguity.

The SEC emphasized that unless its concerns are resolved, it may take further action to ensure compliance with U.S. securities laws, putting the future of these Ethereum and Solana ETFs in doubt.