SEC Reviewing Grayscale Ethereum ETF Staking Application
The U.S. Securities and Exchange Commission (SEC) has begun consideration of a proposal that would allow Grayscale Ethereum ETFs to earn staking rewards. If approved, the application would allow institutional and individual investors to earn passive income from Ethereum staking through Ethereum ETFs. The decision is expected to be announced by May 26, 2025.
What is Grayscale’s Ethereum Staking Proposal?
The proposal, submitted by NYSE Arca on February 14, 2025, would allow Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF to stake a certain amount of ETH. In the process:
Current Custody Structure Will Not Change: Ethereum assets will still be held by Coinbase Custody.
Independent Management: Staking will be managed solely by the ETF’s sponsor and there will be no joint pooling with external institutions.
Regulatory Oversight: The SEC will conduct a detailed review of the application, which will include a public comment period and a 45-day initial review period.
If approved, Ethereum ETF holders will be able to profit from both Ethereum price movements and staking rewards.
SEC’s Changing Attitude on Staking
The SEC has been closely monitoring the staking mechanism for a long time. A similar application by Fidelity in 2024 was delayed due to regulatory uncertainties. However, it has been observed that the SEC’s interest in staking has increased and its stance on the issue has become more flexible recently.
Finance reporter Eleanor Terrett noted on social media platform X that the SEC is increasingly receiving views on staking. In addition, 21Shares’ Core Ethereum ETF staking proposal was accepted by the SEC. This indicates that the possibility of staking being integrated into regulated financial products is increasing.
The SEC’s evaluation of this application will also be a critical test of whether it will classify staking as an investment contract. If the SEC approves, it could pave the way for ETFs that include staking rewards and begin a new era in the crypto investment world.
Expansion and Future Expectations in the Crypto ETF Market
Grayscale has not only applied for an Ethereum staking ETF, but also a spot ETF for Cardano (ADA). This initiative could accelerate the integration of cryptocurrencies into the institutional investment world.
In addition, the SEC’s termination of its investigations into Robinhood’s crypto division and Uniswap indicates that regulators may be softening their approach. If this trend continues, ETFs that include staking are likely to become more common in the future.
What Does It Mean for Ethereum and the Crypto Market?
Since Ethereum switched to a proof-of-stake model with The Merge update in 2022, staking has become a fundamental element of the network. Grayscale’s move could strengthen Ethereum’s place in the traditional financial system.
If the SEC approves:
- Institutional investors will be able to benefit from staking returns.
- Ethereum ETFs could become traditional investment vehicles that provide passive income.
- Similar ETFs could apply for more crypto assets.
- The SEC’s decision could be a significant turning point not only for Ethereum ETFs but also for the crypto ETF market in general. We will continue to follow developments closely.
