Bitwise launches SOL stake ETP, and Europe is becoming an "Compliance enclave" for encryption

Authored by: Pzai, Foresight News

Crypto compliance is immense, and ETFs/ETPs have attracted wide attention from market investors as an important asset investment vehicle. And on December 17, crypto asset manager Bitwise launched a Solana staking ETP in Europe under the ticker symbol BSOL. It is worth mentioning that the ETP of this issuance cooperates with Marinade, a Solana staking service, and provides users with an annualized yield of 6.48%, which is eye-catching among many ETPs. Before Trump took office, in the midst of the crypto compliance progress in other regions outside the United States, Europe took the lead in introducing the Crypto Asset Market Regulation Act (MiCA), which made a clear distinction between the issuance and custody of crypto assets, and because of this, Europe has become one of the few regions that supports the connection between compliant products and on-chain economic benefits.

To take the initiative

Before launching the ETP, Bitwise registered a Solana-related statutory trust in Delaware, USA in November this year, hoping to provide potential Solana ETF services to US investors. With the approval of Bitcoin and Ethereum spot ETFs this year, the expectation for a Solana ETF is also increasing. However, for US investors, the existing securities laws and the compliance progress of the SEC's classification of Solana securities have led to no specific date for the issuance of Solana ETF in the US, and investors cannot access staking rewards in these products. In the prediction of the listing of ETFs in the US, Bloomberg analyst Eric Balchunas has placed tokens such as Solana and XRP, which are closely watched by the SEC, at the lowest priority in the ETF decision-making process. Under these circumstances, major crypto custodians are turning to the European market and providing investors with additional returns through on-chain staking services, while giving investors greater freedom.

And before Bitwise, VanEck and 21Shares had already entered the game. 21Shares has already obtained a total size of over $1.2 billion in Solana ETP, reflecting investors' favor for Solana. Investment in staking-type products also reflects investors' confidence in network activity. In the past year, Solana has performed well in on-chain activities, with its network staking annualized return rate soaring to over 7.5%, higher than many types of ETF products.

Annual staking yield on SOL chain for the past year (Image source: stakingrewards.com)

European compliance landing

At a time of vigorous development in the cryptocurrency field, in response to the rapid growth of the market and the challenges it brings, Europe has taken the lead in enacting the Markets in Crypto-Assets Regulation (MiCA). The regulation will officially become law in 2023 and will have a transition period until June 30, 2026. MiCA aims to establish a unified regulatory framework for the cryptocurrency market, clarifying important aspects such as the scope of application, classification of crypto-assets, regulatory authorities, and corresponding information reporting systems. This makes the EU the first jurisdiction in the world to adopt comprehensive cryptocurrency regulations, which is of great significance for enterprises intending to enter the EU cryptocurrency market. For ETF service providers, while offering services in Europe, the improvement of their compliance environment can also generate regional migration effects. By launching ETF-related products in Europe, they can set a demonstration effect for subsequent encryption compliance matters after the new government takes office and Paul Atkins takes over the SEC. It is expected that custodians in the US will use the collateralized ETP infrastructure adopted in Europe to offer similar products in the US.

And globally, especially in Europe, the number and AUM of cryptocurrency ETPs are growing rapidly. As of today, there are 222 cryptocurrency ETPs in the European market, with AUM reaching 20 billion USD, an increase of nearly 60% in the past month. These products provide retail and institutional investors with a convenient, regulated, and low-cost way to access a range of underlying investments, including but not limited to Bitcoin, Ethereum, and other mainstream cryptocurrencies. In addition, with more traditional financial institutions (such as BlackRock) joining the ranks of cryptocurrency native companies, ETPs not only expand investor access to cryptocurrency investments, but also drive the overall acceptance of cryptocurrencies in the global financial markets.

In the case of landing in the European regulatory environment, it is expected that more compliant product models will be the first to land in Europe (such as RWA, compliant custody, stablecoin payments). This not only reflects the openness of the European Union as a test field and incubator for encrypted compliance and the effectiveness of regulatory frameworks for emerging financial technologies, but also provides valuable experience for other global markets.