Meetings with the Crypto Task Force

Jito Labs and Multicoin Capital recently met with the U.S. SEC’s Crypto Task Force, established to revise crypto policy. According to meeting notes released on Friday, the discussion, held about two weeks ago, focused on the inclusion of staking features in exchange-traded products (ETPs).

The SEC is considering various proposals for Solana ETF listings amid numerous filings from asset managers and exchanges targeting alternative crypto ETFs. Last year, VanEck filed the first for an SOL exchange-listed product, anticipating potential regulatory shifts in favor of the industry if Trump won the election.

Key attendees of the meeting included:
– Kyle Samani (Managing Partner)
– Greg Xethalis (General Counsel)
– Lucas Bruder (Jito Labs CEO)
– Rebecca Rettig (Chief Legal Officer)

They discussed not only abstract concepts of staking and restaking but also practical models for implementing them in products.

The meeting notes highlighted key points:
– Restricting staking in cryptoasset ETPs hinders investors by reducing asset productivity and denying potential returns.
– It also compromises network security by limiting the amount of staked assets.

Staking involves using validators to secure a proof-of-stake network by locking up assets that earn rewards.

The Task Force is evaluating two potential paths:
1. Allowing a portion of an ETP’s assets to be staked through validator service providers.
2. Minting liquid staking tokens for each native asset that is staked, essentially offering a redemption alternative.

Historically, the SEC has been cautious about approving staking ETFs for three reasons:
– Lockup unbonding periods may delay investor redemptions and complicate tax implications.
– Uncertainty exists around whether staking as a service constitutes a securities transaction.