SEC Halts Proposed Crypto ETFs with Staking Rewards, Raising Concerns about Legal Structure

The U.S. Securities and Exchange Commission (SEC) has raised serious legal concerns over proposed exchange-traded funds (ETFs) that use a unique staking mechanism to generate returns for investors. These specific ETFs would allow investors to earn yields by locking their cryptocurrency tokens to support blockchain operations, but the SEC argues they might not meet legal requirements for listing as investment companies. The agency has sent a warning letter to ETF Opportunities Trust, which filed for these ETFs, and claims that the registration documents could mislead investors about compliance.