Important Development for Solana (SOL): If Accepted, It Will Be a First in History

One of the world's largest investment management firms, Franklin Templeton, has applied to the U.S. Securities and Exchange Commission (SEC) for the Solana exchange-traded fund (ETF) and proposed to include staking as part of its structure.

The registration statement provided by the company explicitly mentions staking, which signifies an important move in the evolving regulatory environment for cryptocurrency-based investment products.

According to the application document, the Solana ETF proposed by Franklin Templeton will allow the fund to engage in staking activities and earn rewards in the form of SOL. The application stated, "For any staking activity the Fund may participate in, the Fund will receive certain stake rewards in Solana tokens, and these rewards may be treated as income for the Fund."

Franklin Templeton's move came amid increased interest in launching Solana ETFs, particularly following changes in leadership at the SEC and a more crypto-friendly regulatory environment. Under the previous administration, former SEC Chairman Gary Gensler had taken a cautious stance on crypto-related products. However, the landmark case brought by Grayscale against the SEC, which resulted in the approval of spot Bitcoin ETFs, has paved the way for Ethereum ETFs and potentially other cryptocurrency-based investment vehicles.

Firms seeking approval for Solana ETFs are now in contact with the SEC to discuss the inclusion of staking. Last week, the regulatory agency's newly formed crypto task force met with Jito Labs and Multicoin Capital to explore the feasibility of staking in products traded on the exchange. Similar discussions have also taken place regarding Ethereum ETFs. While the New York Stock Exchange (NYSE) has requested permission for staking in Grayscale's Ethereum ETFs, the Cboe BZX Exchange is seeking approval for 21Shares' staking-enabled Ethereum ETF.

James Seyffart, an ETF analyst at Bloomberg, believes that eventually staking will be allowed for all proof-of-stake assets within ETF structures: "At this point, it's just a matter of when."

According to Seyffart, while regulatory clarity is still necessary, Ethereum ETF staking applications are expected to be reviewed before those for Solana. Previously, many firms had removed staking from ETF applications due to regulatory uncertainty. The SEC had stated that proof-of-stake tokens could be classified as securities and could create barriers to their inclusion in regulated investment products.