• REX and Osprey filed 21 single-asset crypto ETFs with staking rewards for multiple tokens.
• Funds will use Cayman subsidiaries to meet US tax rules and keep their regulatory status.
• The US government shutdown may delay SEC approval of new crypto ETFs despite recent rule changes.

REX Shares and Osprey Funds have jointly submitted applications for 21 single-asset cryptocurrency exchange-traded funds (ETFs) to the U.S. Securities and Exchange Commission (SEC). This coordinated filing marks one of the most extensive attempts to list multiple crypto-focused ETFs. The proposed ETFs cover a wide range of tokens, including Cardano (ADA), Stellar (XLM), Sui (SUI), and Hype (HYPE).

Several of the ETFs are designed to include staking mechanisms. Investors would be able to earn rewards from both token performance and staking participation. Tokens listed for staking include ADA, AVAX, DOT, NEAR, SEI, SUI, TAO, and HYPE. This approach allows investors to gain additional yield beyond price appreciation.

New ETF Models Using Cayman Structures

To stay compliant with U.S. regulations and tax laws, the funds will operate through Cayman Islands subsidiaries. These offshore entities will reflect the strategies of their U.S. counterparts. This structure helps preserve their regulated investment company (RIC) status while maintaining exposure to the underlying assets.

The filing also outlines detailed custody frameworks. Private keys will be stored using hardware security modules (HSMs). Multiple approvals will be required to authorize any transaction or policy change. This is to restrict the chances of illegal access or movement of assets.

Broader Exposure Beyond U.S. Markets

According to the filing, up to 40% of fund assets may be allocated to non-U.S. listed crypto exchange-traded products (ETPs). These products include those listed in Canada and Europe. The documents refer to issuers like 21Shares, CoinShares, and Valour. Moreover, SUI and DOT ETFs from 21shares are listed on DTCC as they wait for approval from the SEC.

This inclusion expands investor access to global markets and provides broader liquidity options. It also allows the funds to mirror successful strategies used in overseas jurisdictions, especially in markets with clearer crypto frameworks.

SEC Timeline and Government Shutdown Impact

The SEC review process takes an average of 75 days after the filing date. Nonetheless, the developments in government lately can push that date away. The current U.S. government shutdown has decreased the operational ability of the federal agencies, including the SEC. 

On September 16, REX-Osprey launched the first US spot XRP and Dogecoin ETFs this week after the SEC review cleared under the Investment Company Act.

While several ETFs are approaching review deadlines, the shutdown has stalled many regulatory functions. Unless key leadership within the SEC accelerates the review, crypto ETF approvals could remain on hold. Meanwhile, more than two dozen filings from other firms also wait in line for approval.

Despite delays, recent approvals of listing rule changes may accelerate future decisions. These changes remove the need for some applications to go through a longer regulatory route. This adjustment could benefit REX and Osprey if the shutdown ends before critical deadlines pass.