Solana stake ETF "SSK" performs well after launch, innovative model attracts follow

On July 3, the first Solana stake ETF in the US was officially listed for trading on the Chicago Board Options Exchange. The product, named REX-Osprey Solana stake ETF, exceeded expectations on its first day, with a trading volume of $33 million and an inflow of $12 million.

This ETF not only tracks the market price of Solana (SOL), but also provides investors with native staking rewards from Solana. It is jointly managed by REX Shares and Osprey, and the trading volume on its first day has already surpassed that of the earlier launched Solana futures ETF and XRP futures ETF.

Compared to traditional crypto asset ETFs, this ETF offers an innovative feature - variable staking reward monthly dividends, with a current dividend yield of 7.3%. An ETF analyst commented: "This is a healthy trading start." He pointed out that the trading volume reached 8 million dollars within the first 20 minutes of listing.

Looking back at the recent performance of other Solana-related ETFs, the Solana futures ETF listed on March 17 had a trading volume of 12.1 million USD on its first day, which was below market expectations. The two Solana futures ETFs launched on March 20 had average daily trading volumes of approximately 1.25 million USD and 2.16 million USD, respectively, and their scale remains relatively small.

In comparison, the total trading volume of multiple spot Bitcoin ETFs listed in January 2024 reached as high as $4.6 billion on their first trading day.

SSK aims to meet the diverse 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 lead to taxable income for shareholders. Investors should consult professional advisors regarding related tax issues.

SSK chose the "C Corporation" registration form, which allows the fund to bypass the traditional ETF approval process and go public quickly. Unlike existing spot Bitcoin and Ethereum ETFs, SSK falls under the regulatory framework of the Investment Company Act of 1940. This means a qualified custodian is required to hold the underlying assets, rather than being held by the fund issuer.

However, this structure also faces some challenges, mainly tax issues. Since staking rewards are considered ordinary income, the fund needs to pay corporate income tax internally, and investors also have 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%.

The attitude of regulators towards this innovative model remains uncertain. Although the SEC has not raised significant obstacles to the application of SSK, they have shown some hesitation regarding C corporations circumventing traditional approval processes. This raises questions about whether this model is applicable for the launch of more funds in the future.

A crypto independent researcher explained that the advantage of a C-corporation structure is its fast approval speed, but the downside is the need for more frequent information disclosure and the issue of double taxation. He believes this structure is more suitable for emerging crypto assets like SOL, rather than mature large assets like Bitcoin.

There are views that the price of SSK may not accurately reflect the price movements of SOL. According to SEC documents, the SSK ETF will invest at least 80% of its net assets in reference assets and other assets that provide exposure to reference assets, but the fund's performance will not completely replicate the performance of the reference assets.

The successful listing of SSK provides a reference model for other crypto asset ETFs. Currently, multiple companies are vying to launch a Solana spot ETF, which is expected to gain approval in the next two to four months. Additionally, there are at least 60 other cryptocurrency ETF proposals awaiting SEC review and potential approval.

The launch of this innovative product marks a step towards the mainstreaming and standardization of cryptocurrency investment. However, it has also sparked discussions regarding regulation, taxation, and investment risks. As more similar products emerge, the market's attention to this emerging investment field may further increase.