- SEC’s decision on Grayscale’s staking proposal expected by May 2025.
- Ethereum ETFs could offer staking rewards, boosting investor returns.
- Grayscale’s staking proposal follows growing interest in crypto ETFs.
The U.S. Securities and Exchange Commission (SEC) is reviewing a proposal by NYSE Arca to allow staking within Grayscale’s Ethereum Exchange-Traded Funds (ETFs). The proposal, filed on February 14, 2025, seeks regulatory approval to enable Grayscale’s Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF to stake Ethereum tokens.
Grayscale Seeks Approval for Staking in Ethereum ETFs
Grayscale’s proposal would enable both ETFs to stake Ethereum through trusted providers, earning staking rewards. The funds will maintain their current custody arrangements with Coinbase Custody to secure their Ethereum holdings.
The SEC is expected to make a decision before May 26, 2025, following a public comment period and a review process.
The staking process would be managed exclusively by the ETF’s sponsor, ensuring that staked Ethereum is not pooled with other entities or marketed as a staking service. The funds aim to generate additional returns for investors without changing the structure of the current ETFs.
The SEC’s review process includes an initial 45-day public comment period, which could extend up to 90 days. If approved, the change could provide Ethereum ETF investors with additional returns from staking rewards. Grayscale’s move follows previous efforts in 2024 to introduce staking to its Ethereum ETFs, which faced regulatory hurdles that delayed approval.
SEC Poses Regulatory Hurdles to Crypto ETF Staking
In March 2024, Grayscale proposed a similar staking structure after Fidelity filed a similar proposal. However, regulatory challenges delayed approval, and the SEC raised concerns about whether staking qualifies as an investment contract under U.S. securities laws.
The SEC has expressed increased interest in staking and has engaged with industry experts to better understand its implications. Recent reports suggest that the SEC continues to seek insights on staking to determine its regulatory approach.
This could also influence the agency’s approach to other staking-related cases, such as the lawsuit against ConsenSys over its MetaMask staking service.
ETF Staking Gains Momentum
Moreover, Cboe BZX Exchange has filed for public comments on a similar proposal related to the 21Shares Core Ethereum ETF. This proposal seeks to allow the ETF to stake Ethereum and generate additional returns for investors without pooling or delegating the staking activities. These proposals reflect the growing interest in staking within Ethereum ETFs as a means to offer added value to investors.
The SEC’s decision on these proposals could set a significant precedent for the future of Ethereum ETFs. Staking, a process where cryptocurrency holders earn rewards by participating in blockchain validation, offers investors an opportunity to benefit from staking rewards.