In a groundbreaking move, Canary Capital, a prominent U.S. asset management firm, has submitted a proposal to the SEC for a novel SEI spot ETF that includes staking. This initiative is the first of its kind, promising investors direct exposure to the SEI altcoin’s price, while also incorporating a staking element to potentially increase returns. Coinbase and BitGo are designated to manage the asset custody for this ETF.
How Does the SEI ETF Stand Out?
In their SEC filing, Canary Capital reveals that the fund aims to track SEI’s spot price, mirroring traditional ETF structures, but with a unique feature—potential gains from staked assets. All share transactions will be processed in cash, drawing parallels to existing Bitcoin and Ethereum spot ETFs available in the U.S.
SEI is a Layer-1 Blockchain utilizing the Cosmos SDK and EVM compatibility, striving to blend Ethereum’s developer standards with Solana‘s speed. IBC-enabled cross-chain functionality is boosting its appeal. Following Canary Capital’s announcement, SEI’s value surged by 8.6%, hitting $0.23.
Canary Capital has been actively pursuing innovative ETF concepts, as evidenced by their recent proposals for Pengu, Sui, Hedera, and Litecoin ETFs, all with staking elements. This direction indicates a strong commitment to incorporating staking mechanisms in institutional investment tools.
What Is the SEC’s Stance on Staking?
While the SEC’s perspective on staking-inclusive crypto ETFs remains uncertain, industry calls for greater clarity are intensifying. Approved spot Ethereum ETFs in the U.S. do not allow staking, unlike similar products in Canada and Europe.
A coalition of 30 industry leaders, including major companies like a16zcrypto, Consensys, and Kraken, has approached the SEC’s new Crypto Task Force. In a letter to SEC official Hester Peirce, they argue that staking is primarily a technical process and should not be categorized as a securities transaction.
The coalition further advocates for the responsible integration of staking in ETFs and urges a move away from excessive regulations that could inhibit staking’s growth. Given new SEC chair Paul Atkins’s viewed support for crypto innovation, industry players are hopeful for progress.
The finance sector is witnessing a pivotal period, with Canary Capital spearheading initiatives that could redefine the ETF landscape. As regulatory bodies and industry stakeholders navigate this ambitious proposal, the SEI ETF signifies a potential shift towards innovative financial products.
