SEC Investigates Staking in Cryptocurrency ETPs in Collaboration with Jito Labs and Multicoin Capital
In a recent update, the U.S. Securities and Exchange Commission (SEC) met with Jito Labs and Multicoin Capital to explore an exciting possibility – adding staking to exchange-traded products (ETPs). This meeting is part of the SEC’s ongoing push to shape a clear and structured regulatory framework for cryptocurrency investments.
On February 14, the U.S. SEC’s Crypto Task Force released a memorandum revealing the meeting. The discussion, held on February 5, focused on integrating staking into crypto-based ETPs. Attendees included Jito Labs CEO Lucas Bruder, CLO Rebecca Rettig, and Multicoin Capital Managing Partner Kyle Samani, along with General Counsel Greg Xethalis. Notably, the discussion centered on two main topics: whether staking could be added to crypto ETPs and how it could be implemented. The filing suggests that adding staking could benefit investors while helping issuers secure blockchain networks.
Notably, the task force is considering two options for staking in ETPs: one is allowing a portion of the assets to be staked via service providers running validators, and the other is minting a liquid staking token for each staked asset, essentially allowing redemption.
“Restricting staking in cryptoasset ETPs harms (i) investors, by crippling the productivity of the underlying asset and depriving investors of potential returns, and (ii) network security, by preventing a significant portion of an asset’s circulating supply from being staked,” the meeting notes read.
As per the documents, the SEC has been cautious about staking ETFs for three main reasons. The lockup “unbonding periods” could conceivably slow down the redemption process for investors and complicate tax implications. There is also uncertainty around whether staking as a service counts as a securities transaction.
Besides, the SEC is reviewing multiple proposals for Solana (SOL) ETFs, as asset managers and exchanges file to list alternative crypto ETFs. Last year, VanEck became the first firm to file for an SOL exchange-listed product, hoping to gain a first-mover advantage in case a regulatory shift occurred with a potential Trump election win.