VanEck Takes a Step Back on BNB ETF Staking in Latest SEC Filing

VanEck, an asset management firm, has revised its plans regarding a proposed BNB exchange-traded fund (ETF), choosing not to involve staking activities. This decision emerged in an updated filing with the U.S. Securities and Exchange Commission (SEC), where the company acknowledged potential downsides to its ETF’s performance due to this strategy shift.

Key Takeaways

VanEck has opted out of integrating staking in its new BNB ETF.
The decision comes despite previously indicating plans to stake assets.
Potential regulatory concerns regarding BNB as a security were highlighted in the filing.
The ETF’s performance could lag behind direct BNB holdings due to the absence of staking rewards.

VanEck quietly backpedals on BNB ETF staking in latest SEC filing

VanEck Withdraws Staking from BNB ETF Plans

VanEck has recently altered its approach concerning assets in the proposed spot BNB ETF, letting go of plans to stake these assets. This change is significant, particularly when compared to its recently launched Solana ETF, which does offer staking opportunities.

In an updated S-1 filing with the SEC, VanEck stated: "the Trust will not employ its BNB in Staking Activities and accordingly will not earn any form of staking rewards or income of any kind from Staking Activities" during the listing period. The filing included a caution that "there can be no assurance that the Trust will engage in any Staking Activities" in the future, either.

VanEck recognized that eliminating staking might cause the ETF's performance to be inferior to simply holding BNB directly, as investors would miss out on possible staking rewards.

This follows VanEck's application for a spot BNB ETF back in May, where they suggested a possibility of staking a portion of assets through trusted providers. Notably, earlier this month, the firm also released the third Solana ETF in the U.S., which provides staking yields.

ETF, BNB _VanEck’s BNB ETF S1 filing. Source:_SEC

Regulatory Concerns Surrounding BNB

In the revised filing, VanEck made it clear that staking would potentially be carried out via third-party “Staking Services Providers,” emphasizing there is no certainty that staking ETF assets will occur. Should VanEck opt to pursue this route, they would submit a prospectus to the SEC beforehand.

While the filing leaves some questions unanswered about the reasoning behind VanEck's cautious approach to BNB staking, it does hint at worries about regulatory complications. The document mentions that if the SEC were to classify BNB as a security, it could negatively impact the value of ETF shares and lead to the termination of the trust.

VanEck explained, “The test for determining whether a particular digital asset is a ‘security’ is complex and difficult to apply, and the outcome is difficult to predict.” The firm acknowledged that BNB might currently be categorized as a security or could be classified as such in the future by the SEC or a federal court.

In this scenario, VanEck could dissolve the ETF—either on its own accord, believing that BNB is a security, or following a decision from the SEC or federal court declaring it as such. The filing noted that, as long as the Sponsor believes there are valid reasons to conclude that the Trust’s BNB is not a security, they do not intend to dissolve the Trust based on the possibility of BNB being deemed a security later on.

BNB's History with the SEC

Reflecting on BNB's past interactions with the SEC, VanEck mentioned the lawsuits from 2023 against Binance, Coinbase, and Kraken for trading unregistered securities. At that time, the SEC classified 68 digital assets, including BNB, as securities. However, in July of the prior year, a U.S. federal court stated that secondary sales of the BNB token were not security transactions.

The classification of staking and related cryptocurrencies under securities law continues to spark debate. In late May, the SEC’s Division of Corporation Finance stated that “Protocol Staking Activities,” involving crypto staked in a proof-of-stake blockchain, “don’t need to register with the Commission transactions under the Securities Act” or fall under "one of the Securities Act’s exemptions from registration."

Nonetheless, this clarification did not end the discussion, as Caroline Crenshaw was the only commissioner opposing the guidance, arguing it “fails to deliver a reliable roadmap for determining whether a staking service” constitutes an investment contract under securities laws.