Solana infrastructure provider Jito Labs, asset managers VanEck and Bitwise and two other stakeholders are appealing to the US Securities and Exchange Commission (SEC) to allow liquid staking for Solana exchange-traded products (ETPs).
Liquid staking is a form of allocating tokens to a validator while receiving a derivative token in return, effectively meaning the staked tokens aren’t “locked up.” Liquid staked tokens (LSTs) can be traded, used in decentralized finance or even loaned. However, the process introduces additional risks not seen in traditional staking processes.
Groups appealing to the SEC, including the Solana Policy Institute and Multicoin Capital Management, argue that liquid staking could improve capital efficiency by allowing ETP issuers to avoid forced rebalancing.
“If issuers are forced to limit staking to a set percentage of assets, large creations and redemptions would force rebalancing, thereby increasing the costs of operating the ETP and introducing potential tracking error,” the letter reads. “LSTs could be used to rebalance quickly in that scenario and could even be delivered or received in-kind by [authorized participants]…”
Additional benefits cited in the letter include increased security to the network, more product options for investors and additional revenue for ETP issuers. At least nine Solana (SOL) ETPs are currently awaiting a decision from the SEC.
The letter does not cover the risks of liquid staking, among them being smart contract bugs or vulnerabilities, depegging events and slashing risks. The SEC has not issued formal guidance on liquid staking, though it has said traditional staking may not constitute a securities offering if it’s directly tied to a consensus process.
Related: Smart contracts and staking arrive on Bitcoin’s base layer
Crypto ETP staking a hot-button issue in 2025
Solana isn’t the only cryptocurrency advocates want to see staked in ETPs. Issuers of Ether (ETH) funds are also seeking approval for staking features.
On July 17, Nasdaq filed an application with the SEC to allow staking in BlackRock’s iShares Ether ETF. The stock exchange filed similar applications for Grayscale on February.
Some analysts are also bullish on the prospect, saying that adding staking to Ether ETFs could allow for an influx of institutional capital into these funds.
In March 2025, BlackRock’s head of digital assets, Robbie Mitchnick, said that while the firm’s Ether ETF has been successful, it has been “less perfect” without staking.
Magazine: X Hall of Flame: Bitcoin $500K prediction, spot Ether ETF ‘staking issue’— Thomas Fahrer
Source link
