TL;DR
- VanEck removed staking plans for its proposed Spot BNB ETF in an updated S-1 filing with the SEC.
- The asset manager states it will avoid staking to circumvent the risk of BNB being classified as an unregistered security.
- Excluding staking rewards could lead to the ETF’s performance lagging behind direct BNB holding.
Asset manager VanEck is retracting its earlier plans and will no longer offer staking activities in its recently proposed Spot BNB Exchange-Traded Fund (ETF). In an updated S-1 filing with the U.S. Securities and Exchange Commission (SEC), the firm stated that the Trust will not utilize its BNB in staking activities, nor will it earn any form of staking rewards or income from such activities at the time of listing.
This decision differs from the Solana ETF that the firm recently launched in the U.S., which does offer staking yields, and underscores VanEck’s cautious stance regarding a product related to the Binance token.
By avoiding staking, the firm acknowledged in the document that the ETF’s performance could lag behind direct BNB holdings, as fund investors would forgo potential rewards from network participation. However, the firm’s preventative approach actually responds to deeper regulatory concerns.
Therefore, the VanEck ETF expansion without staking service is intrinsically linked to the debate about BNB’s classification as an unregistered security. The firm admitted that a determination by the SEC that BNB is a security could adversely affect the value of the ETF shares, and even force the dissolution of the Trust.
The Regulatory Risk of BNB and Staking
Although the firm did not clearly explain the reason for this specific caution with BNB, it did mention that 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 asset manager stated that it “acknowledges that BNB may currently be a security, based on the facts as they exist today, or may in the future be found by the SEC or a federal court to be a security.”
In that context, the market must closely monitor the legal risk. The SEC has previously classified BNB as a security in its lawsuits against crypto exchanges.
If the agency or a federal court were to conclude that the token is a security, VanEck could dissolve the ETF. For now, while the firm believes in good faith that the Spot BNB ETF is not a security, it will not dissolve the Trust, but the shadow of BNB’s security classification remains the biggest risk factor to monitor.
