Canada and the United States have taken divergent paths in their regulatory approaches to crypto-based exchange-traded funds (ETFs).
Canada is reportedly getting ready to launch spot Solana ETFs, which will include staking via TD, this week after regulators gave the go-ahead to multiple issuers. The US SEC, on the other hand, seems unprepared to move forward and has postponed decisions on staking functions for Grayscale’s spot Ethereum (ETH) ETF.
Canada pioneers spot Solana ETFs
According to Eric Balchunas, a senior ETF analyst for Bloomberg, the Ontario Securities Commission (OSC) in a pioneering move has given the green light to multiple issuers, including Purpose Investments, Evolve, CI, and 3iQ, to launch spot Solana ETFs in Canada.
These ETFs, which are reportedly set to debut on April 16, 2025, would be a global first for Solana, a high-performance blockchain characterized by scalability and low transaction costs. However, the approval is not the only noteworthy report about these ETFs.
These ETFs also stand out because they come complete with staking functions, a feature that will allow investors to earn rewards by participating in Solana’s proof-of-stake consensus mechanism.
Balchunas also said in his tweet that the Solana ETFs will invest in long-term SOL holdings in physical form. This means they will directly hold the underlying cryptocurrency instead of derivatives like futures contracts.
He also emphasized in a follow-up clarification that TD Bank’s role in everything is limited to only disseminating information, rather than facilitating the staking process itself.
Staking rewards on Solana typically range from 5% to 7% annually, which could make the upcoming ETFs more attractive to yield-seeking investors. Canada’s approach to ETFs aligns with its history of crypto innovation, which saw the country approve Bitcoin and Ethereum ETFs in 2020 and 2021, respectively.
US SEC cautious about staking in Ethereum ETFs
Unlike Canada’s regulators, the US SEC has taken a more cautious stance on crypto ETFs, particularly where staking functionalities are concerned.
According to reports, the SEC has postponed the staking component of Grayscale’s spot ETH ETF, citing concerns over the risk to investors, the potential of market manipulation, and the regulatory classification of staking rewards.
Unlike Solana ETFs, staking in Ethereum allows holders to lock up ETH to validate transactions and earn rewards that typically range around 4% to 5% annually. Unfortunately, the SEC considers staking to be a potential security offering, which could subject it to stricter regulations under US securities laws.
Ethereum’s staking mechanism is also complex territory, as the SEC must determine whether staking rewards are taxable or will be considered an investment contract under the Howey Test.
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