Canada is once again leading the way in crypto innovation, as regulators prepare to approve the world’s first spot Solana (SOL) exchange-traded funds (ETFs) that also include staking functionality. This bold move, expected to materialize as early as April 16, places Canada at the forefront of crypto-based investment products while the United States continues to tread carefully, particularly when it comes to staking mechanisms.
According to Bloomberg senior ETF analyst Eric Balchunas, multiple asset managers—including Purpose Investments, Evolve, CI, and 3iQ—have received the green light from the Ontario Securities Commission (OSC) to launch these ETFs. Notably, these funds will hold actual SOL tokens rather than derivatives like futures, offering direct exposure to Solana for retail and institutional investors alike. Balchunas emphasized that “these are not synthetic or futures-based products. They will hold physical SOL.”
What sets these ETFs apart is their built-in staking feature. This allows investors to earn rewards by participating in Solana’s proof-of-stake consensus mechanism, a function that is rarely available in publicly traded investment vehicles. Staking on Solana typically yields between 5% and 7% annually, which could significantly enhance the appeal of these products for yield-focused portfolios. However, Balchunas clarified that TD Bank’s involvement is limited strictly to information dissemination, not the staking process itself.
Solana, known for its speed, scalability, and low transaction fees, is being positioned as a viable alternative to Ethereum in the race for blockchain dominance. The integration of staking into these ETFs represents a natural extension of Canada’s progressive stance on crypto. The country was the first to approve spot Bitcoin and Ethereum ETFs in 2020 and 2021, respectively, and now it is once again pushing boundaries with the Solana initiative.
Meanwhile, across the border, the U.S. Securities and Exchange Commission (SEC) is moving in the opposite direction. While Canada gears up for launch, the SEC has delayed its decision on whether to allow staking within Grayscale’s proposed spot Ethereum ETF. This delay is particularly notable given that the current SEC administration had previously shown signs of being more receptive to crypto investment vehicles.
The hesitation centers around concerns that staking might qualify as a security, which would subject it to additional scrutiny and regulation. The SEC is reportedly evaluating whether staking rewards meet the criteria of an investment contract under the Howey Test, a legal framework used to determine what constitutes a security. The Commission has also raised flags over investor risk, potential market manipulation, and how staking returns should be treated for tax purposes.
Ethereum’s staking model involves locking up ETH to validate transactions and secure the network, typically yielding between 4% and 5% annually. But unlike Canada’s regulatory clarity, the U.S. is still navigating murky legal waters, leaving companies like Grayscale in limbo.
As both countries continue to explore the rapidly evolving world of digital assets, the contrast could not be more striking. While Canada opens the door to innovation with a clear regulatory path, the U.S. remains cautious, if not hesitant, to fully embrace staking as a legitimate financial product. For now, Canada’s latest move with Solana ETFs may serve as a case study in what bold yet regulated innovation can look like in the crypto investment landscape.
By Alejandro Silva Ramírez, Crypto Analyst & Columnist