The Pledge Boom on Wall Street

The Pledge Boom on Wall Street
In 1688, captains gathered at Edward Lloyd’s Cafe in London, searching for someone willing to provide insurance for their voyage. Wealthy merchants will personally sign below the details of their ships, becoming “underwriters” and providing personal wealth as collateral for these high-risk voyages.

The more reputable the insurer, the higher the safety of the entire voyage. The more secure the system, the more business it attracts. This is a simple transaction: providing capital, reducing everyone’s risk, and obtaining profit sharing.

Reading the new guidance from the US Securities and Exchange Commission (SEC), it is clear that cryptocurrency is simply digitizing the model invented by coffee shop insurers – people earn returns by putting assets at risk, making the entire system safer and more trustworthy.

Pledge. Yes, it’s back again.

On May 29, 2025, everything changed. On that day, the US government made it clear that pledging would not get you into legal trouble. Firstly, let’s review why this is so important at present.

In staking, you lock the token to help protect network security and obtain stable returns.

Validators use pledged tokens to verify transactions, propose new blocks, and ensure smooth operation of the blockchain. In return, the network pays them with newly minted tokens and transaction fees.

Without stakers, proof of stake networks like Ethereum will collapse.

Of course, you can pledge tokens, but no one knows if the SEC will come knocking on your door one day and claim that you are conducting unregistered securities issuances. This regulatory uncertainty has left many institutions standing on the sidelines, watching enviously as individual pledgers earn annualized returns of 3-8%.

The craze of large-scale pledge
On July 3rd, Rex Osprey Solana+staking ETF was officially launched, becoming the first fund in the United States to offer direct cryptocurrency exposure and include staking rewards. The fund holds SOL through its Cayman subsidiary and pledges at least half of its holdings.

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BNB Smart Chain(BEP20)Address:0xb01e8aa1b334a49b224e4ba9f84eec1e58bd5087

Tron（TRC20）Address:TS2SWtDXFmCnCV1EdFMN3A4JQ5uYWzsqTk

Ethereum(ERC20)Address:0xb01e8aa1b334a49b224e4ba9f84eec1e58bd5087

Solana Address:3L1Hc5K5QMhtEPfCen71VMAJQf4vk63DuT8S1mUD8URB

Rex Shares announces the first pledged cryptocurrency ETF in the United States.

They are not the only ones.

Robinhood has just launched an encrypted staking service for American clients, with the first batch supporting Ethereum and Solana. Kraken has added Bitcoin staking through the Babylon protocol, allowing users to earn profits while holding BTC on the native chain.

VeChain has launched a $15 million StarGate staking program. Even Bit Digital has abandoned all of its Bitcoin mining business and focused on Ethereum staking.
What changes have occurred now?

Two major regulatory breakthroughs
Firstly, the SEC’s May 2025 Pledge Guidance.

It clearly states that if you pledge your own cryptocurrency to help run the blockchain, it is completely legal and not considered a high-risk investment or security.

This includes personal staking, entrusting tokens to others, or staking through trusted trading platforms, as long as your staking directly supports the network. This removes most pledge activities from the definition of “investment contract” in the Howey test. This means you no longer need to worry about accidentally violating complex investment regulations due to staking and earning rewards.

The only warning is that anyone who promises to guarantee profits, especially by mixing staking and collateralization, or using fancy terms such as “DeFi bundled guaranteed returns” or “revenue farming,” may cause problems.

Secondly, the CLARITY Act.

This is a bill proposed in Congress aimed at clarifying which government agency is responsible for regulating different digital assets. Specially protect those who run nodes, pledge, or use self custodial wallets from being seen as Wall Street brokers.

The bill introduces a new category of digital commodities called “investment contract assets” and establishes standards for digital assets as securities (regulated by the SEC) or commodities (regulated by the CFTC). The bill also sets a process for the “maturity” of blockchain projects or tokens, allowing them to transition from SEC regulation to CFTC regulation, and sets time limits for SEC review to avoid indefinite delays.

So, what does this mean for you?

Now, you can pledge cryptocurrencies with more confidence in the United States, thanks to the guidance of the SEC. If the CLARITY Act is passed, staking and participating in cryptocurrencies will become simpler and more secure.

Pledged rewards still need to be taxed as ordinary income when you obtain “control and dominance”, and if you subsequently sell the rewards for profits, you need to pay capital gains tax. All pledged income, regardless of the amount, must be declared to the IRS.
Although the price is not impressive, Ethereum’s staking data shows significant changes. The amount of ETH pledged has reached a historical high, exceeding 35 million, accounting for nearly 30% of the total circulation. Although this trend has been ongoing for months, these infrastructures have suddenly become more important now. What is happening in the corporate board of directors?

BitMine Immersion Technologies has just raised $250 million to purchase and pledge Ethereum, with Fundstrat’s Tom Lee serving as its chairman. The company bet that the pledge reward plus potential price appreciation would surpass the performance of traditional treasury bond bond assets.

SharpLink Gaming doubled its bets on this strategy, expanding its ETH treasury to 198167 and pledging 100% of its holdings. In just one week of June, they earned a staking reward of 102 ETH. Just lock the token and you can get free funds.

Meanwhile, Ethereum ETF issuers are queuing up for pledge approval. Bloomberg analysts predict that there is a 95% chance that pledged ETFs will receive regulatory approval in the coming months. The head of digital assets at BlackRock called staking a “major change” for Ethereum ETFs, and he may be right.

If approved, these pledged ETFs may reverse the outflow of funds that has plagued Ethereum funds since their launch. Why only be satisfied with price exposure when both price exposure and returns can be obtained simultaneously? Cryptocurrency speaks in the language of Wall Street
For many years, traditional finance has struggled to understand the value proposition of cryptocurrencies. Digital gold? Maybe. Programmable currency? Sounds complicated. Decentralized applications? What are the issues with centralized applications?

But the benefits? Wall Street understands returns. Of course, the bond yield has rebounded from the near zero low in 2020, and the yield of one-year treasury bond is about 4%. But can a regulated crypto fund generate 3-5% annualized staking returns by protecting the network, while providing potential upside space for underlying assets? This looks extremely attractive.

This concerns legitimacy. When pension funds can purchase Ethereum exposure through regulated ETFs and earn returns by protecting the network, this is a big deal.

The network effect has already emerged. As more institutions participate in staking, the internet becomes more secure. The more secure the network, the more users and developers it attracts. As the adoption rate increases, transaction costs increase and staking rewards also increase. This is a virtuous cycle that benefits all participants.

You don’t need to understand blockchain technology or believe in decentralization to appreciate an asset that pays you for holding it. You don’t need to believe in Austrian economics or distrust the central bank to appreciate a form of productive capital. You just need to understand that the internet needs security, and security providers should be rewarded.