TLDR:

Franklin Templeton filed for a Solana ETF with the SEC, joining other major firms like Grayscale and VanEck in seeking approval for Solana-based funds, with Bloomberg analyst giving 70% odds of approval in 2025
The ETF proposal uniquely includes provisions for staking rewards, making it the first Solana ETF filing to incorporate staking capabilities
Solana’s price has fallen 16% to $168 over the past week due to issues with the Libra token and cooling meme coin activity
Franklin Templeton’s existing crypto products include Bitcoin ETF (EZBC) with $442M in inflows and Ethereum ETF (EZET) with $34M AUM
A bipartisan group of senators has urged the SEC to clarify its stance on staking in crypto exchange-traded products, arguing current restrictions weaken blockchain networks

Franklin Templeton, a major asset management firm, has filed an application with the Securities and Exchange Commission (SEC) for a first-of-its-kind Solana exchange-traded fund (ETF) that would include staking capabilities.

The filing, submitted on February 21, 2025, marks the first time a proposed Solana ETF has incorporated staking rewards as part of its structure.

The San Mateo, California-based investment manager joins a growing list of firms seeking approval for Solana-based funds, including Grayscale, Bitwise, Canary, 21Shares, and VanEck. However, Franklin Templeton’s proposal stands out for its inclusion of staking features, which could allow the fund to earn additional Solana tokens through network participation.

According to the registration statement, the proposed Franklin Solana ETF would list on the Cboe BZX Exchange and use Coinbase Custody Trust Company, LLC as its custodian. The filing specifically mentions that “the Fund would receive certain staking rewards of Solana tokens, which may be treated as income to the Fund” in exchange for staking activities.

70% Probability?

Bloomberg Senior ETF Analyst Eric Balchunas has assigned a 70% probability to Solana ETFs receiving regulatory approval this year, though he declined to specify timing. The path to approval still faces several hurdles, including regulatory review, ongoing enforcement actions, and public comment periods.

Our official alt coin ETF approval odds are out. Litecoin leads w 90% chance, then Doge, followed by Solana and XRP. We are only doing for 33 Act $IBIT-esque filings. But def poss to see futures or Cayman-subsidiary type 40 Act stuff get through as well. https://t.co/JSaNnifjbu

— Eric Balchunas (@EricBalchunas) February 10, 2025

The filing comes at a challenging time for Solana’s market performance. The cryptocurrency has experienced a 16% decline over the past week, trading at approximately $168. This downturn has been attributed to its connection to issues surrounding the Libra token and a broader slowdown in meme coin projects on the Solana network.

Franklin Templeton has already established a presence in the cryptocurrency ETF market. The firm’s Bitcoin ETF (EZBC) has attracted $442 million in net inflows, placing it eighth among Bitcoin funds. Their Ethereum ETF (EZET) holds $34 million in assets under management, ranking sixth out of eight funds in that category.

The staking component of the proposed ETF aligns with recent regulatory discussions in Washington. A bipartisan group of senators, including Cynthia Lummis (R-Wyo.), Kirsten Gillibrand (D-N.Y.), and Ron Wyden (D-Ore.), recently sent a letter to the SEC requesting clarification on its position regarding staking in crypto exchange-traded products.

The senators expressed concern that the SEC’s current stance on staking in ETPs could weaken blockchain networks. Their letter pointed out that staking provisions were removed from previous ETF filings due to regulatory pressure from the SEC.

Staking Features

Industry experts are optimistic about the inclusion of staking features in future crypto ETFs. Bloomberg ETF analyst James Seyffart told The Block,

“I think staking will ultimately be allowed for all proof-of-stake assets inside an ETF wrapper. It’s just more a matter of when at this point.”

The SEC’s approach to staking has evolved since the previous administration, when former SEC Chair Gary Gensler expressed skepticism toward crypto assets and characterized proof-of-stake tokens as securities. The regulatory environment has become more accommodating following successful litigation by Grayscale regarding spot Bitcoin ETFs.

Last week, the SEC’s newly formed crypto task force met with Jito Labs and Multicoin Capital to discuss incorporating staking into exchange-traded products. Similar discussions have occurred regarding Ethereum ETFs, with the New York Stock Exchange requesting permission for staking in Grayscale’s Ethereum ETFs.

The broader crypto ETF market has shown strong momentum, with Bitcoin funds accumulating over $40 billion in net inflows over the past year. This success helped pave the way for the approval of Ethereum ETFs in July 2024.

Franklin Templeton recently launched the Templeton Crypto Index ETF (EZPZ) on February 21, 2025. This fund tracks price movements of Bitcoin and Ethereum using CF Benchmark’s Institutional Digital Asset Index.

BitBull Capital CEO Joe DiPasquale expressed optimism about the approval prospects for Solana ETFs, citing the current crypto-friendly regulatory environment and the success of Bitcoin ETFs as supporting factors.

The SEC will need to establish specific rules regarding staking before making any decisions. Ethereum ETF staking proposals will face earlier deadlines than those for Solana, potentially setting precedents for future approvals.

Franklin Templeton has not provided additional comments on their filing when contacted for this article.

The post Franklin Templeton Files for First-Ever Staking-Enabled Solana ETF appeared first on CoinCentral.

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Filed under: News - @ February 22, 2025 12:15 am