TLDR
- REX-Osprey files for the first U.S. BNB staking ETF, with approval expected by November.
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The proposed ETF will provide exposure to BNB through direct staking and third-party validators.
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BNB staking ETF will be managed under the Investment Company Act of 1940 for tax efficiency.
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The fund could pave the way for institutional exposure to BNB while maintaining liquidity.
REX-Osprey, in partnership with Osprey Funds, has filed for approval with the SEC to launch what could become the first U.S. BNB staking ETF. The fund aims to offer direct exposure to the price of BNB, the native cryptocurrency of the BNB Chain, which was developed by Binance. With approval expected by early November, this ETF would represent a significant step forward in bringing DeFi products into traditional investment markets.
The proposed fund will be managed under the Investment Company Act of 1940, a regulatory framework that allows the ETF to offer exposure to BNB through both direct holdings and staking. REX-Osprey plans to stake a portion of the ETF’s BNB holdings, enabling investors to earn staking rewards while maintaining liquidity.
Fund Structure and Staking Component
The BNB staking ETF will allow qualified institutions to use tokenized BNB as collateral to borrow stablecoins. The fund will be registered under Form N-1A, which is used for open-end management investment companies. Unlike other spot ETFs, which are traditionally backed by physical assets, this fund will hold tokenized BNB, giving it flexibility in terms of staking and liquidity.
The fund will process share creations and redemptions in cash instead of in-kind. It may also interact with liquid staking protocols, enabling investors to access staking yield while keeping the liquidity of the asset intact.
While a significant portion of the BNB will be staked, the fund will keep a liquidity buffer by ensuring that no more than 15% of its net assets are illiquid, thus addressing the seven-day unbonding period for BNB.
A New Path to SEC Approval for Crypto ETFs
The proposed BNB staking ETF follows a similar route taken by REX-Osprey with its Solana (SOL) staking ETF. Instead of using the more common Securities Act of 1933, the BNB staking ETF will be managed under the 1940 Act, allowing it to include staking rewards in the product structure. The success of the Solana ETF, which attracted $161.7 million in inflows in its first two months, has set a precedent for this method of approval.
Despite its promising start, the REX-Osprey Solana ETF has not attracted as much attention as Bitcoin or Ethereum ETFs. This has raised questions about the broader demand for staking-based ETFs. However, analysts remain optimistic about the potential for the BNB staking ETF, particularly given the growing interest in DeFi and institutional staking yields.
Institutional Interest and BNB’s Role in DeFi
BNB has long been used to pay transaction fees, participate in governance, and secure the BNB Chain through delegated proof-of-stake validation. The proposed ETF will allow investors to tap into the yield generated by staking BNB, positioning it as an attractive option for institutions looking for both exposure to BNB’s price and income from staking rewards.
Although Binance continues to have a significant influence on the validator operations and governance of the BNB Chain, the ETF will provide a level of decentralization by working with third-party validators. This decentralized approach is vital for attracting institutional investors who require compliance and transparency while engaging with DeFi markets.
With the backing of major crypto players such as Circle, VanEck, and WisdomTree, the BNB staking ETF could provide a new avenue for institutional exposure to BNB. The platform would also enable U.S. investors to gain a more secure and regulated way to participate in the growing DeFi ecosystem.
