The first Solana stake ETF launched, performance exceeded expectations

On July 3rd, the REX-Osprey Solana stake ETF (ticker: SSK) was officially listed for trading on the Chicago Options Exchange, marking the first Solana stake ETF product in the United States. The ETF had an outstanding performance on its first day, with a trading volume of $33 million and an inflow of $12 million, exceeding the expectations of many market observers.

This ETF not only tracks the market price of Solana (SOL) but also provides investors with native stake rewards for Solana. Managed jointly by REX Shares and Osprey, the SSK has surpassed the trading volume of the previously launched Solana futures ETF and XRP futures ETF on its first day.

Compared to traditional crypto asset ETFs, SSK offers an innovative feature - variable stake reward monthly dividends, with a current dividend rate of 7.3%. An ETF analyst commented: "This is a healthy trading start," noting that the trading volume reached 8 million USD in the first 20 minutes before listing.

Innovation and Positioning of SSK

Compared to the lackluster performance of the Solana futures ETF launched earlier this year, the performance of SSK can be described as impressive. According to public information, SSK aims to meet the needs of various investors, including:

• Retail investors seeking exposure to cryptocurrencies through brokerage accounts.
• Crypto native investors hope to bridge the gap between blockchain innovation and mass adoption.
• Financial advisors and registered investment advisors seeking compliant blockchain income avenues
• Institutional investors need ETF transparency.

It is worth noting that stake 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 a professional advisor regarding relevant tax issues.

Unique Registration Structure

The rapid launch of SSK can be attributed in part to its choice of the "C corporation" registration format. This structure allows the fund to bypass the traditional ETF approval process, speeding up the listing process. Unlike traditional crypto asset ETFs, SSK chose to register under the Investment Company Act of 1940, rather than the Securities Act of 1933.

This registration method requires funds to be diversified, distribute profits regularly, and avoid investing in assets considered too risky for retail investors. At the same time, the tax rules of the "40 Act" are relatively straightforward, with a capital gains tax of 20% for long-term holdings exceeding 12 months, and distributed income taxed at ordinary income rates.

In addition, SSK requires a qualified custodian to hold the underlying assets. Anchorage Digital serves this role as the only federally regulated bank that can both custody and stake digital assets.

Challenges and Impacts

Although the structure of SSK is highly innovative, it also faces some challenges. One of the main issues is the high tax burden. Since staking rewards are considered ordinary income, the fund needs to pay corporate income tax, and investors also have to bear dividend tax and capital gains tax. This results in a heavy overall tax burden, even though the management fee of the fund is 0.75%.

In addition, although the SEC has not set obvious obstacles to the approval process for SSK, it has shown some hesitation regarding this model that bypasses traditional approval procedures. This means that the launch of similar funds in the future may face more regulatory scrutiny.

A cryptocurrency research expert pointed out that although this structure has a fast approval speed, it also has disadvantages. For example, it requires more frequent information disclosure, increasing management costs, and faces double taxation issues. He believes this structure is more suitable for emerging assets like SOL, rather than mature large assets like Bitcoin.

Future Outlook

The successful listing of SSK provides a reference model for other cryptocurrency ETFs. Currently, multiple companies are competing to launch a Solana spot ETF, and analysts expect these funds may be approved within two to four months. At the same time, at least 60 other cryptocurrency ETF proposals are awaiting review and potential approval from the SEC.

The launch of SSK has lowered the barrier for traditional investors to participate in Solana staking, providing them with a way to gain exposure to Solana and earn staking rewards through regular brokerage accounts. This innovation may pave the way for the emergence of more similar products in the future, but how it will develop specifically needs further observation.