Jito Labs, Asset Managers Vaneck and Bitwise of Solana Infrastructure Provider, and two other stakeholders have appealed to the U.S. Securities and Exchange Commission (SEC) to allow liquid staking of Solana Exchange-Traded products (ETPs).
Liquid Staking is a format in which tokens are assigned to validators while receiving differential tokens. Liquid Stake Tokens (LSTs) can be used or even borrowed in decentralized finance. However, this process introduces additional risks that are not seen in traditional staking processes.
Groups appealing to the SEC, including the Solana Policy Institute and Multicoin Capital Management, claim that liquid staking can improve capital efficiency by allowing ETP issuers to avoid forced rebalancing.
“If an issuer is forced to limit staking to a set percentage of assets, massive creation and redemption will force a rebalance, thereby increasing the cost of manipulating the ETP and introducing potential tracking errors,” the letter reads. “LST can be used to quickly rebalance in that scenario, and can be delivered by (certified participants) or even received in-kind…”
Additional perks cited in the letter include increased security to the network, increased product options for investors, and additional revenue from ETP issuers. At least nine Solana (SOL) ETPs are currently awaiting decisions from the SEC.
This letter does not cover the risk of smart contract bugs and vulnerabilities, catastrophic events and novel risks of liquid staking. The SEC does not issue formal guidance on liquid staking, but it says that traditional staking may not constitute a securities offering if it is directly linked to a consensus process.
Related: Smart contracts and staking arrive at Bitcoin base layer
Crypto ETP will staking hot buttons in 2025
Solana is not the only cryptocurrency supporter who wants to place bets on ETP. Ether (ETH) fund issuers are also seeking approval to staking the feature.
On July 17, NASDAQ submitted an application to the SEC to allow BlackRock to staking iShares Ether ETFs. The Stock Exchange submitted a similar application to Grayscale in February.
Some analysts are also bullish on prospects, saying that adding staking to ether ETFs could potentially inflow of institutional capital into these funds.
In March 2025, BlackRock’s head of digital assets, Robbie Mitchnick said the company’s Ether ETF is successful, but it is “not perfect.”
Magazine: X-Hall of Frame: Bitcoin $500K Prediction, Spot Ether ETF ‘Staking Ice’ – Thomas Farler
