In a recent report, financial analysis firm Bernstein has expressed cautious optimism about the future of Ethereum, particularly in relation to the potential inclusion of staking yields in the cryptocurrency's spot ETFs.
Bernstein senior analyst Gautam Chhugani has noted that more flexible leadership at the US Securities and Exchange Commission (SEC) could facilitate the inclusion of staking in these exchange-traded funds, which would represent a significant step towards mass adoption of Ethereum.
A friendly SEC could boost the appeal of Ethereum spot ETFs
The cryptocurrency market has been keeping an eye on regulatory policy in the United States following the electoral victory of Donald Trump, who has been elected for the presidential term of 2025-2029.
With the recent election of Trump as a pro-crypto president, there is a chance of seeing a more crypto- and digital asset-friendly Securities and Exchange Commission (SEC), which could open up a new opportunity for Ethereum-based ETFs to include staking as part of their offerings to investors.
Chhugani argues that if the SEC is placed under the direction of a leader more receptive to cryptocurrencies, the agency could revise its current policies and allow fund managers to include staking in Ethereum spot ETFs.
Staking is a process where ETH holders can lock their tokens in a smart contract to validate transactions and earn rewards, which not only increases the security of the network but also offers passive returns to investors.
Ethereum ETF staking and investor interest
The inclusion of staking in Ethereum ETFs could result in increased appeal to institutional and retail investors. Currently, staking is an activity that requires considerable technical knowledge and a significant capital commitment, which limits its accessibility. However, if ETFs include this option, investors could benefit from staking rewards without needing to directly manage their tokens, which could significantly increase interest in these investment products.
Furthermore, the possibility of earning passive returns through ETFs could incentivize more investors to hold ETH for the long term, which could contribute to the stability and growth of the Ethereum network. This scenario would not only benefit investors but also strengthen Ethereum’s position in the cryptocurrency and blockchain ecosystem.
The inclusion of ETH staking in Ethereum spot ETFs could also make the US cryptocurrency exchange-traded fund market even more competitive with Hong Kong, where interest in the asset class is also growing.
The keys to Chhugani's optimism
Chhugani’s optimism about Ethereum’s growth isn’t based solely on the potential approval of staking ETFs. The Bernstein analyst has also highlighted several reasons that support his positive view for the cryptocurrency’s future, including increased activity on the Ethereum blockchain, value locked in DeFi, ETH burning, and technical improvements awaiting the network.
The steady growth of the Ethereum blockchain
First of all, activity on the Ethereum blockchain has seen steady growth. According to recent data, the number of transactions and the amount of gas used on the network have increased significantly. This indicates that Ethereum remains a preferred platform for the development of decentralized applications (dApps) and the execution of smart contracts.
Ethereum’s popularity in the cryptocurrency ecosystem is reflected in its market capitalization, which has maintained a strong position despite market volatility.
Source: I coinmarketcap.co
Ethereum hits record levels in DeFi deposits
Chhugani also highlighted that the value stored in DeFi on the Ethereum network has reached record levels. DeFi is a sector that uses smart contracts to offer decentralized financial services such as lending, trading, and savings, and Ethereum is currently the leading platform in this sector, with a large number of projects and protocols operating on its blockchain and maintaining a total stored value of more than $ 74.000 million.
This growth in DeFi not only demonstrates user confidence in Ethereum technology but also indicates significant growth potential in the future.
Reduction in the total supply of ETH tokens
ETH burning, another factor that Chhugani sees as positive, refers to the permanent removal of a portion of ETH tokens from circulation. This process is carried out through the EIP-1559 mechanism, which was implemented in July 2021. ETH burning reduces the total supply of tokens, which can have a positive impact on the price in the long run. In addition, ETH burning also reflects Ethereum’s commitment to sustainability and reducing inflation, which is attractive to institutional investors.
Technical improvements to the Ethereum network
Technical improvements being implemented on the Ethereum network are also a source of further optimism. Ethereum’s transition to Proof of Stake (PoS) is a crucial example that was undertaken to improve the network’s scalability, security, and energy efficiency.
Ethereum leads institutional adoption
Despite competition in the cryptocurrency market, Ethereum has cemented its position as a go-to institutional platform. Chhugani noted that while Solana has gained ground in terms of retail users, Ethereum remains the choice for institutional use cases, such as the tokenization of assets and the issuance of stablecoins.
Asset tokenization is a process that converts traditional assets, such as real estate or stocks, into digital tokens that can be traded on the blockchain. Ethereum has been a pioneer in this field, with numerous projects using its blockchain to tokenize assets and facilitate their trading on decentralized marketplaces. Ethereum’s transparency, security, and interoperability make it an ideal platform for asset tokenization, which has attracted the interest of financial institutions and businesses around the world.
In addition, Ethereum is the preferred platform for issuing stablecoins, which are digital tokens whose value is linked to a fiat currency, such as the US dollar. Currently, stablecoins such as USDT, USDC y DAI They are widely used in the cryptocurrency ecosystem for trading, payments, and lending. Ethereum’s stability and reliability have made it the natural choice for stablecoin issuance and trading, which has contributed to its institutional growth.
In summary, Bernstein’s report reflects well-founded optimism about Ethereum’s future, supported by the potential approval of staking ETFs, increased activity on the blockchain, value locked in DeFi, ETH burning, and technical improvements to the network. Despite the competition, Ethereum remains a go-to institutional platform, suggesting that its position in the cryptocurrency and blockchain market will remain strong in the years to come.
