Grayscale has moved to change how income from its Solana Staking ETF reaches investors, filing to shift GSOL from an accrual model to regular cash distributions funded by staking rewards. If the amendment takes effect as planned, the trust will begin converting staking income into dollars at least once every quarter and paying the net proceeds to shareholders.

Restructuring the trust

According to a prospectus supplement filed with the US Securities and Exchange Commission, Grayscale is adopting a Third Amended and Restated Trust Agreement for the Solana Staking ETF, which trades under the ticker GSOL. The filing lays out a new framework under which rewards generated by staking the fund’s SOL holdings will no longer simply remain inside the product and be reflected over time in net asset value.

Instead, the trust would sell those staking rewards for cash on a quarterly schedule or more frequently, then distribute the proceeds after deducting expenses. The amendment is expected to become effective on or around August 7.

How the payout model changes

Grayscale said it has been staking all of the ETF’s SOL holdings, with those rewards currently yielding about 6.1% on an annual basis. Under the prior setup, that yield accumulated within the fund and was incorporated gradually into the ETF’s NAV. Under the revised structure, the trust would realize the rewards in cash and pass them through to shareholders directly.

The filing makes clear that the distributions will not be fixed. Actual payout levels are expected to vary depending on factors including validator performance and the prevailing staking yield. Grayscale said distributions would consist of net proceeds, meaning trust expenses and sponsor fees would be deducted before any cash is paid out.

Fee reductions accompany the filing

The restructuring comes alongside changes to the fund’s fee schedule that could leave a larger share of staking income available for investors. Grayscale formalized a reduction in the sponsor fee from 0.35% to 0.19%, effective June 25. It also cut the staking fee from 23% to 7%.

Those reductions alter the economics of the product at the same time as the trust moves toward regular distributions. While the filing presents the changes as increasing potential payouts, it also notes that the new arrangement may carry different tax implications for shareholders.

What happens next

The planned August 7 effective date gives existing and prospective shareholders a defined point at which the ETF’s treatment of staking rewards would change. Rather than seeing yield remain embedded in the value of the fund, investors would receive periodic cash payments tied to the trust’s sale of staking proceeds.

The filing does not promise a set income level, and the amount available for distribution will depend on staking conditions and fund-level deductions. Still, the change marks a shift in how Grayscale is positioning GSOL: less as a vehicle where staking returns are only reflected in valuation, and more as one designed to distribute that income on a recurring basis.

The move follows Grayscale’s SEC filing to amend the structure of its Solana Staking ETF and coincides with lower fees that, according to the filing, allow shareholders to retain more of the yield generated by staking. The company said the revised distribution approach and related amendments are set to take effect around August 7.

Source: Cryptopolitan