Thomas Daniels
To allow ETH staking in Grayscale Spot Ether ETFs, the NYSE is proposing a rule change.
An important step forward in the regulated cryptocurrency investment industry is Grayscale Investments’ decision to include Ethereum staking in its spot Ether exchange-traded funds (ETFs). According to a filing dated February 14, the New York Stock Exchange (NYSE) has proposed this initiative to the U.S. Securities and Exchange Commission (SEC) and is requesting clearance.
In order to generate staking incentives, Grayscale would be able to stake Ethereum (ETH) within the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH) if the approval was approved. Grayscale has made it clear, though, that it would not support or ensure any particular degree of return from staking activity.
Earn Staking Rewards with Grayscale Without Providing Yield Guarantees
The filing states that any awards received via staking will be considered revenue for the funds. Grayscale’s staking operations will not be categorized as “delegated staking” or a component of a “staking-as-a-service” paradigm, the document further states. Rather, the company claims that adding staking to its ETFs will improve the formation and redemption process’ efficiency, which will eventually help investors.
“Allowing the Trusts to stake their Ether would benefit investors by permitting the Trusts to exercise their rights to free additional Ether and help the Trusts better track the returns associated with holding Ether,” according to the application.
The current anticipated staking reward rate for Ethereum is around 2.06%, according to data from cryptocurrency exchange Coinbase.
A Similar Proposal Was Recently Filed by 21Shares
Grayscale’s action comes after asset management 21Shares made a similar suggestion and recently asked the SEC for permission to include staking to its spot Ether ETF. As the industry push for staking-enabled ETFs grows, the CBOE BZX Exchange filed the application on 21Shares’ behalf.
Staking in ETFs has historically been viewed with caution by the SEC. Before approving spot Ether ETFs in July 2024, regulators demanded in May 2024 that issuers take staking capabilities out of their applications. Recent industry conversations, however, indicate that the SEC might be reevaluating its position, especially under a potentially more crypto-friendly administration.
SEC regulators may now be willing to reconsider ETH and other cryptocurrency asset exchange-traded products (ETPs) staking, including possible new uses for Solana (SOL) ETPs, according to research firms Jito and Multicoin Capital.
The authorization of ETH staking in ETFs may signal a significant change in institutional cryptocurrency investment as regulatory viewpoints change, which could boost Ethereum ecosystem growth and liquidity.
