Introduction
In a significant move for the cryptocurrency landscape in the United States, Nasdaq has proposed to list the VanEck JitoSOL ETF, potentially heralding the introduction of liquid staking token exchange-traded funds (ETFs) in the country. This filing is unprecedented as it seeks to offer a product backed by a liquid staking token, rather than merely a foundational cryptocurrency like Bitcoin or Ethereum.
Details of the VanEck JitoSOL ETF
The proposed VanEck JitoSOL ETF aims to provide investors exposure to the performance of Solana, a popular blockchain network, along with its staking yield through a straightforward investment vehicle. Should the U.S. Securities and Exchange Commission (SEC) approve this initiative, it would allow investors to engage with Solana’s price fluctuations and benefits of staking rewards via a single investment.
The filing operates under Rule 5711(d), which pertains to commodity-based trust shares, and seeks validation for a trust holding JitoSOL directly. JitoSOL is essentially a token that represents SOL cryptocurrency deposited in a Solana staking pool, which rewards holders with a transferable and liquid token that automatically accumulates staking yields.
Advantages of Liquid Staking
Liquid staking is noteworthy for allowing token holders to contribute to the security of the network while maintaining liquidity. Instead of locking up assets in a validator, they possess a derivative token that they can trade, facilitating exposure management without cumbersome on-chain requirements. JitoSOL’s structure allows for the direct compounding of rewards into its balance, thereby enhancing the net asset value by reflecting both the deposited SOL and its accrued yield.
Regulatory Considerations
Furthermore, the proposal highlights previous instances where the SEC approved ETFs tied to spot Bitcoin and Ether, arguing that similar regulatory oversight and anti-manipulation measures will apply to the proposed JitoSOL ETF. However, a key difference is the absence of a regulated futures market for JitoSOL, which may bring additional scrutiny from regulatory bodies.
Pricing for the trust’s holdings will utilize the MarketVector JitoSol VWAP Close Index, which consolidates pricing across various trading platforms. This structure is designed to accommodate both cash and in-kind transactions thereby enhancing liquidity and minimizing tracking discrepancies.
Conclusion
The filing asserts that JitoSOL closely mirrors the economic dynamics of SOL itself, prompting Nasdaq to suggest that regulators should consider it akin to its underlying asset. The SEC has 45 days post-publication to assess the proposal, but this period could extend to up to 90 days.
It’s relevant to note that while several funds in the U.S. already integrate both spot exposure and staking rewards, such as the REX-Osprey Solana + Staking ETF and its Ethereum equivalent, none currently hold a liquid staking token outright. In contrast, Europe seems to have progressed further in this sector; 21Shares has already rolled out a Jito-staked Solana product, thus positioning the VanEck proposal as a critical test of the SEC’s willingness to embrace more innovative ETF structures incorporating blockchain yield methodologies.
