The Solana ETF Approval: A Regulatory Masterclass

How the REX-Osprey Solana Staking ETF bypassed traditional pathways and what it means for crypto

The approval of the REX-Osprey Solana Staking ETF (SSK) has sent shockwaves through the cryptocurrency community—and for good reason. This wasn't just another ETF approval; it was a masterclass in what industry insiders call "regulatory engineering," a sophisticated approach that bypassed traditional approval pathways in ways that seemed almost impossible just months ago.

The Unprecedented Nature of This Approval

What makes the SSK ETF so remarkable isn't just that it holds Solana—it's the combination of features that should have made approval nearly impossible under traditional SEC frameworks:

Two Groundbreaking Firsts:

It's the first ETF to incorporate staking rewards while holding the underlying spot asset

It achieved approval through a non-standard pathway that skipped the typical 19b-4 process required for spot cryptocurrency ETFs

To understand why this is so significant, consider the timeline disparity. Bitcoin CME futures launched in December 2017, and it took until January 2024 for a spot Bitcoin ETF to gain approval—over six years. Ethereum followed a similar pattern: CME futures in February 2021, spot ETF approval in May 2024—roughly three years.

Solana's CME futures only began accumulating meaningful data in March 2025, with open interest sitting at a modest $160 million. Yet here we are, with an approved ETF in a fraction of the time it took for Bitcoin or Ethereum.

The "Side Door" Strategy: Understanding Regulatory Engineering

The term "regulatory engineering" might sound like financial jargon, but it represents a fundamental shift in how crypto companies approach SEC approval. Rather than attempting to rewrite existing regulations—a process that can take years—savvy legal teams are finding creative pathways within the current framework.

The 6c-11 Pathway: A Different Route

Instead of the standard 19b-4 process, the SSK ETF utilized what's known as the 6c-11 pathway. This distinction matters more than it might initially appear:

Traditional Route (19b-4):

-Requires extensive public hearings

-Involves formal SEC voting procedures

-Designed specifically for exchange listings

-Typically takes 6-12 months minimum

Alternative Route (6c-11)

-Streamlined approval process

-No mandatory public hearings

-Originally designed to speed up listing times

-Can be completed in weeks rather than months

The key insight here is that the 19b-4 form isn't actually an ETF approval mechanism—it's a requirement for exchange listings. By structuring the product differently, the SSK ETF sidestepped this entire process.

The "Impurity" Loophole: Cboe BZX Rule 14.11(l)

Perhaps the most ingenious aspect of this approval lies in the fund's structure. The SSK ETF is approximately 60% Solana and 40% foreign exchange-traded products (ETPs). This might seem like dilution, but it's actually a feature, not a bug.

Cboe BZX Rule 14.11(l) allows for expedited listing of funds that hold "non-pure" assets. Originally created to help CBOE compete with Nasdaq and NYSE by reducing listing times, this rule has now been repurposed as a pathway for crypto ETFs.

This explains why the fund includes that 40% allocation to foreign ETPs—it's not poor portfolio construction, it's regulatory strategy. By introducing this "impurity," the fund qualifies for fast-track approval processes that pure crypto funds cannot access.

The Staking Revolution: Custody Through Anchorage Digital

The inclusion of staking rewards represents perhaps the most significant regulatory breakthrough. Traditional ETF structures struggle with staking because of custody and operational complexity. The SSK ETF solves this through Anchorage Digital, a qualified custodian that can handle both asset storage and staking operations.

This development opens doors far beyond Solana. If staking can be incorporated into ETF structures, it fundamentally changes the value proposition of crypto ETFs, making them more attractive to yield-seeking investors.

What This Means for the Future

The approval of the SSK ETF represents more than just another investment product—it's a proof of concept for a new regulatory approach. The success of this "regulatory engineering" strategy suggests we may see:

Accelerated Timelines: Future crypto ETFs may not need to wait years for approval if they can structure around existing regulatory frameworks.

Expanded Asset Classes: The staking approval opens possibilities for other yield-generating crypto assets to be included in ETF structures.

Creative Structuring: The "impurity" strategy could become a template for other crypto products seeking fast-track approval.

The Broader Implications

This approval comes at a time when the SEC has appointed more crypto-friendly commissioners, suggesting a shift in regulatory philosophy. Rather than creating entirely new frameworks for cryptocurrency products, the agency appears more willing to work within existing structures.

For investors, this means potentially faster access to new crypto investment products. For the industry, it represents a roadmap for future product development that doesn't require years of regulatory uncertainty.

Looking Forward

The REX-Osprey Solana Staking ETF may be remembered as a turning point in crypto regulation—not because it changed the rules, but because it showed how to work creatively within them. As more companies study this approval process, we're likely to see similar "regulatory engineering" approaches applied to other crypto assets.

The door has been opened not just for alternative cryptocurrencies, but for an entirely new class of yield-generating crypto investment products. What seemed impossible just months ago has become a template for the future of crypto ETFs.