{"id":14596,"date":"2025-08-01T02:30:53","date_gmt":"2025-08-01T00:30:53","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=14596"},"modified":"2025-08-01T02:30:53","modified_gmt":"2025-08-01T00:30:53","slug":"momentum-builds-for-liquid-staking-in-solana-etfs-as-institutional-interest-grows","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/08\/01\/momentum-builds-for-liquid-staking-in-solana-etfs-as-institutional-interest-grows\/","title":{"rendered":"Momentum Builds for Liquid Staking in Solana ETFs as Institutional Interest Grows"},"content":{"rendered":"

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Solana infrastructure provider Jito Labs, asset management firms VanEck and Bitwise, alongside two additional stakeholders, are requesting<\/a> the US Securities and Exchange Commission (SEC) to permit liquid staking for Solana exchange-traded products (ETPs). <\/p>\n

Liquid staking is a method of allocating tokens to a validator while receiving a derivative token in exchange, effectively indicating the staked tokens aren\u2019t \u201clocked away.\u201d Liquid staked tokens (LSTs) can be traded, utilized in decentralized finance, or even loaned. Nonetheless, this procedure introduces additional risks not present in conventional staking methods.<\/p>\n

Organizations petitioning the SEC, which include the Solana Policy Institute and Multicoin Capital Management, contend that liquid staking could enhance capital efficiency by enabling ETP issuers to circumvent enforced rebalancing.<\/p>\n

\u201cIf issuers are compelled to restrict staking to a predetermined percentage of assets, substantial creations and redemptions would necessitate rebalancing, thereby escalating the operating costs of the ETP and potentially causing tracking errors,\u201d the letter articulates. \u201cLSTs could facilitate rapid rebalancing in such cases and could even be delivered or received in-kind by [authorized participants]\u2026\u201d<\/p>\n

Letter from Jito Labs and other stakeholders to the US SEC. Source: <\/em>SEC<\/em><\/a>
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The letter mentions additional advantages such as enhanced network security, a broader range of product options for investors, and increased revenue for ETP issuers. Currently, at least nine Solana (SOL<\/a>) ETPs are pending a decision from the SEC.<\/p>\n

The letter does not address the risks associated with liquid staking, which include potential smart contract bugs or vulnerabilities, depegging incidents, and slashing risks. The SEC has yet to provide formal guidance on liquid staking, though it has stated that traditional staking may not qualify as a securities offering<\/a> if it is directly linked to a consensus process.<\/p>\n

Related: <\/strong><\/em>Smart contracts and staking arrive on Bitcoin\u2019s foundational layer<\/strong><\/em><\/a><\/p>\n

Crypto ETP staking a contentious issue in 2025<\/h2>\n

Solana isn\u2019t the sole cryptocurrency that proponents wish to see staked in ETPs. Issuers of Ether (ETH<\/a>) funds are also pursuing approval for staking functionalities. <\/p>\n

On July 17, Nasdaq submitted an application to the SEC<\/a> for staking in BlackRock\u2019s iShares Ether ETF. The stock exchange filed similar applications for Grayscale<\/a> in February.<\/p>\n

Some analysts are optimistic about the potential, suggesting that incorporating staking into Ether ETFs could facilitate an influx of institutional capital<\/a> into these funds. <\/p>\n

In March 2025, BlackRock\u2019s head of digital assets, Robbie Mitchnick, remarked that while the firm\u2019s Ether ETF has performed well, it has been \u201cless ideal\u201d without staking<\/a>.<\/p>\n

Magazine: <\/strong><\/em>X Hall of Flame: Bitcoin $500K prediction, spot Ether ETF \u2018staking issue\u2019\u2014 Thomas Fahrer<\/strong><\/em><\/a><\/p>\n