Institutional support grows for liquid staking in Solana ETFs, amid SEC deliberations.
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Institutional Push for Liquid Staking in Solana ETFs Gains Momentum
In a significant move for the cryptocurrency sector, major players like Jito Labs, VanEck, and Bitwise are rallying for the U.S. Securities and Exchange Commission (SEC) to greenlight liquid staking for Solana-based exchange-traded products (ETPs). This appeal underscores a strategic shift towards enhancing capital efficiency and offering more robust investment options in the digital asset space.
Understanding Liquid Staking
Related: Lido's Dominance Eases as 160,000 ETH Leaves, Binance's Liquid Staking Platform Sees Growth
Liquid staking represents an evolution in the staking process, where tokens are allocated to a validator, and a derivative token is received in return. This innovation allows the original tokens to remain active in the market, facilitating trading and participation in decentralized finance without being locked up. However, this flexibility introduces risks such as smart contract vulnerabilities and potential depegging events.
Institutional Backing and the SEC’s Role
The appeal to the SEC, supported by entities like the Solana Policy Institute and Multicoin Capital Management, argues for the advantages of liquid staking in maintaining capital efficiency. The stakeholders highlight that liquid staking could prevent forced rebalancing of assets, which often leads to increased operational costs and potential tracking errors. The appeal suggests that liquid staked tokens (LSTs) could be used to swiftly rebalance portfolios, providing a more seamless experience for ETP issuers.
Related: MoonPay Unveils Solana Staking Amid Rising Demand
Currently, at least nine Solana ETPs await the SEC’s decision, reflecting the growing interest in integrating liquid staking into mainstream financial products. While the SEC has previously opined that traditional staking might not constitute a securities offering if it is directly linked to a consensus process, it has yet to issue formal guidance on liquid staking.
Broader Implications for the Crypto Market
The push for liquid staking is not isolated to Solana. Other cryptocurrencies, such as Ethereum, are also in the spotlight as issuers seek approval for similar staking features in their ETPs. Nasdaq has recently filed applications with the SEC to permit staking in BlackRock’s iShares Ether ETF, indicating a broader industry trend towards incorporating staking into traditional financial instruments.
Related: Legal Crypto Staking in 2025: SEC Guidelines Explained
Industry experts suggest that the integration of staking into ETPs could attract substantial institutional capital, further legitimizing and expanding the cryptocurrency market. As the SEC deliberates, the outcome could set a precedent for how digital assets are integrated into traditional financial frameworks.
For more detailed insights, you can explore the official SEC letter and further analysis on the potential impacts on Ethereum ETFs.
John is a renowned journalist and blockchain enthusiast with over 12 years of experience covering global financial trends and cryptocurrency markets. His sharp insights and ability to break down complex topics make him a cornerstone of finandcrypto.com. Known for his analytical skills, John is passionate about delivering content that empowers the crypto community.
