VanEck Adds Staking Rewards to Solana ETN in Europe

VanEck has expanded its investment offerings in Europe by adding staking rewards to its Solana ETN (Exchange-Traded Note), providing investors with a new opportunity to generate passive income while holding Solana assets. This development allows investors to benefit from staking rewards, which are automatically reinvested into the ETN. As of mid-October, the Solana ETN, which is traded on Euronext Amsterdam, holds around $74 million in assets.

Investors in the Solana ETN will receive 75% of the staking rewards, while VanEck retains a 25% fee for managing the staking process. These rewards are reinvested, and their value is reflected in the net asset value (NAV) of the ETN, which updates daily. The automatic reinvestment allows for steady growth in value for the investors, with the NAV increasing based on the rewards generated. VanEck's introduction of staking rewards for Solana follows its similar move to offer Ethereum staking rewards in its Ethereum ETN.

The staking process in VanEck’s Solana ETN is non-custodial, meaning that the custodian holding the assets retains control over the staked funds. This approach ensures greater security for investors by maintaining control over the assets throughout the staking process. The non-custodial structure enhances security, a key feature that investors value when considering staking options in the volatile world of cryptocurrencies.

While VanEck’s Solana ETN is expanding in Europe with this new staking feature, the company is still awaiting approval from the SEC for its Solana ETF application in the United States. VanEck had filed this application in July 2023, but there has been no decision yet. In contrast to the European ETN, the VanEck Solana Trust in the U.S. will not include staking rewards. Instead, the trust will hold Solana assets similarly to how spot Ethereum ETFs are structured in the U.S., focusing on direct holdings rather than offering additional income through staking.

VanEck’s Head of Digital Assets Research, Matthew Sigel, recently shared his skepticism about the approval of Solana ETFs under the current SEC leadership, led by Chair Gary Gensler. In a post on X (formerly Twitter), Sigel expressed doubts, suggesting that Solana ETF approvals might not happen under the present regulatory environment. Bloomberg Senior ETF Analyst Eric Balchunas echoed this view, noting that the likelihood of approval could be influenced by the outcome of the 2024 U.S. elections.

Balchunas highlighted that the final deadline for Solana ETF decisions might be as late as mid-March 2025, but an important milestone could come in November 2024. According to him, if President Biden is re-elected, the Solana ETFs might be “dead on arrival (DOA),” whereas a Trump victory could increase the chances of approval, given the former president's more lenient stance on financial and crypto regulations.

Currently, in the U.S., staking rewards are not permitted for crypto ETFs. This restriction applies to major cryptocurrencies like Bitcoin and Ethereum, whose ETFs hold the assets directly and only reflect the spot price of these digital currencies. Without the ability to stake, U.S.-based crypto ETFs do not generate additional income beyond the changes in the market value of the assets they hold. This makes European offerings like VanEck's Solana ETN more attractive to investors who are looking for opportunities to earn passive income through staking.

The addition of staking rewards to the Solana ETN could mark an important step in diversifying investment strategies for cryptocurrency investors. By automatically reinvesting the rewards, VanEck’s approach provides a more hands-off way for investors to benefit from staking without needing to manage the staking process themselves. With the $74 million already invested in the Solana ETN as of October, this new feature might attract additional investors looking to combine traditional investment vehicles like ETNs with the potential for extra earnings from staking rewards.

As the debate over crypto ETF regulations continues in the U.S., VanEck’s European offerings could serve as a model for how staking rewards might one day be incorporated into U.S.-based products. However, for now, U.S. investors must wait and watch the decisions of the SEC and the outcome of the 2024 elections to see whether similar staking products will become available in the American market. Until then, the Solana ETN with staking rewards in Europe remains a unique offering in the growing field of crypto investment products.