TLDR
- The SEC has officially filed an application from NYSE Arca, paving the way for Grayscale’s Ethereum ETFs to potentially generate staking income.
- The proposal ensures that when ETH is staked, it remains fully under custodial protection without being removed from the wallet's control.
- Following recent applications for XRP, Cardano, and Polkadot, Grayscale aims to broaden its range of crypto ETFs.
- A decision by the SEC is anticipated by May 26, 2025, with a potential review window of up to 90 days.
- Grayscale plans to handle staking directly, ensuring that Ether remains separate from that managed by other validators.
Acknowledging a filing from NYSE Arca, the SEC may permit Grayscale’s Ethereum ETFs to earn through staking mechanisms, contingent on regulatory approval. The proposal, submitted on February 14 Filed on February 25, 2025, the initiative would integrate Grayscale's ETFs into Ethereum’s proof-of-stake network, if accepted.
Grayscale's new rule proposition involves staking some Ethereum through vetted providers, while keeping full management within its scope without combining resources with third parties.
According to the filing, Grayscale might occasionally stake part of the fund's Ethereum using selected providers, avoiding the 'delegated staking' model scrutinized by regulators.
A notable element of this proposal safeguards that any staked Ethereum stays within custodial oversight, thereby alleviating concerns that have previously hindered regulatory go-ahead.
The ETF funds would accrue extra ETH via staking, accounting it as fund income, secured continuously by Coinbase Custody.
The concept of staking Ethereum requires participants to stake their holdings to become validators, ensuring network integrity while earning additional ETH, a system that was solidified after Ethereum’s shift to proof-of-stake in 2022. their ETH Winning the SEC’s nod would enable Grayscale to better sync its ETF returns with the inherent value changes of holding Ethereum, with a decisive deadline set for May 26, 2025, or possibly longer, depending on SEC deliberations.
Grayscale has been keen on inputting staking options within its Ethereum ETF framework for a while, inspired by similar schemes like that of Fidelity, although regulatory intricacies have delayed action.
The SEC has historically questioned if staking aligns with investment contract definitions under existing U.S. securities laws, yet recent efforts show a more engaged dialogue with market stakeholders.
Eleanor Terrett, through platform X (formerly Twitter), pointed out the SEC’s deep interest in staking, suggesting a tie to ongoing regulatory actions, including reevaluating cases like its lawsuit against Consensys over MetaMask’s staking service.
Changes in Regulations and Market Effects
The SEC's acceptance of Grayscale's idea fits into a broader trend, as seen with 21Shares’ Core ETF which also delves into staking possibilities, highlighting the growing role of staking in regulated trades.
Grayscale's filing is part of its larger strategic goal to enhance its cryptocurrency ETF offerings, leveraging recent applications, including those for XRP, Cardano, and Polkadot, to expand beyond primary assets like Bitcoin and Ethereum. Ethereum Grayscale has submitted an XRP ETF proposal that the SEC is actively reviewing, with public comments open for 21 days and decision anticipated by October 18, 2025.
Additionally, a spot ETF filing for Cardano is under SEC review, potentially allowing indirect asset exposure to investors.
Industry analysts note that evolving expectations about regulatory shifts under President Trump's administration could be prompting a fresh wave of application submissions, banking on a possibly altered stance from an evolving SEC leadership.
In parallel, the SEC has ceased its scrutiny of Robinhood’s crypto segment and the Uniswap exchange, which might signal a regulatory recalibration affecting how staking within ETFs could be approached. Cardano (ADA) With the SEC evaluating Grayscale’s plan, many investors and market players are keenly observing for outcomes that might redefine how blockchain-based investments secure regulatory endorsement along with protecting investors.
Maisie is a seasoned journalist in the crypto finance space, having contributed extensively to various notable platforms such as Moneycheck.com, level-up-casino-app.com, and serving as Editor in Chief at Blockfresh.com.
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