Various stakeholders, including Jito Labs and VanEck, have approached the U.S. Securities and Exchange Commission with a request to permit liquid staking for Solana-related products.
What is Liquid Staking?
Liquid staking is a mechanism that allows investors to allocate tokens to a validator while receiving a derivative token in return. This means the staked tokens are not 'locked up,' and they can be traded, used in decentralized finance, or even loaned. However, this process carries additional risks that are not present in traditional staking.
Appeal to SEC and Its Implications
Groups including the Solana Policy Institute and Multicoin Capital Management argue that liquid staking could improve capital efficiency by allowing ETP issuers to avoid forced rebalancing. In their letter to the SEC, they state: 'If issuers are forced to limit staking to a set percentage of assets, large creations and redemptions would force rebalancing, thereby increasing the costs of operating the ETP.'
Comparison with Ether Staking
Solana is not the only cryptocurrency advocates want to see staked in ETPs. Issuers of Ether funds are also seeking SEC approval for staking features. For example, on July 17, Nasdaq filed an application to implement staking in BlackRock's iShares Ether ETF. Analysts believe that adding staking could attract institutional capital.
The issue of permitting liquid staking for Solana and other cryptocurrencies in ETP products remains pertinent, and its resolution could significantly impact market evolution and investor interest.
