Grayscale, known for its digital asset management, is ramping up its campaign to get the U.S. Securities and Exchange Commission (SEC) to allow staking in its Ethereum ETFs.
Grayscale is once again taking the lead in the race to innovate in the cryptocurrency market. The firm, which was instrumental in the approval of the first Bitcoin ETFs, is now pushing hard for the U.S. Securities and Exchange Commission (SEC) to allow staking in its Ethereum ETFs.
With this strategy, the firm seeks to unlock millions in rewards that, as of February 2025, have been lost due to the inability to participate in staking on the network, estimated at $61 million for the Ethereum exchange-traded funds managed by Grayscale in the United States.
BUY ETHEREUM ON BIT2MEStaking, which involves locking up cryptocurrency to validate transactions and secure the network, could transform the Ethereum ETF offering, making them more attractive to institutional and individual investors. Although the SEC postponed its decision until June 2025, experts are optimistic about an eventual approval that would allow cryptocurrency-based ETFs to generate additional returns without investors directly managing their assets.
Grayscale's push to allow staking in ETFs
Grayscale Investments has raised the bar for its Ethereum exchange-traded funds (ETFs) to actively participate in the staking process, that is, locking up tokens to validate transactions on the Ethereum network and earning rewards in return. In a meeting In a key filing with the SEC's Cryptocurrency Working Group, representatives from the asset management firm have requested to amend their filings, specifically Form 19b-4, to allow their ETFs, such as the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH), to include this functionality.
This pressure is a response to a palpable reality: Ethereum ETFs in the United States have missed out on approximately $61 million in potential staking rewards since their launch, a disadvantage compared to similar products in international markets such as Canada, where this feature is already approved.
Grayscale is seeking to have the SEC adjust its regulations so that the U.S. market doesn't fall behind and can offer these competitive advantages, attracting institutional investors and strengthening Ethereum's infrastructure through the support that staking represents on its network.
PARTICIPATE IN ETH STAKING HERETo facilitate this integration, Grayscale has proposed a simple, almost "point-and-click" mechanism that would ensure that managers maintain control over token custody and reduce the traditional risks associated with staking. This approach would allow investors to earn additional returns without sacrificing the fund's security or liquidity.
The potential impact on US crypto investments
The inclusion of staking in Ethereum ETFs would have a significant impact on the US crypto landscape. Currently, ETFs in this country accumulate more than $6.200 billion in assets, with Grayscale accounting for a third. Therefore, allowing staking would not only increase returns for participants but also improve the security and efficiency of the Ethereum blockchain itself, as these ETFs would actively participate in validating transactions.
This innovation in financial products could attract a greater number of institutional investors, who generally value stability and consistent returns in their portfolios. Furthermore, liquidity would be efficiently managed through diverse strategies for staking unlocking periods, minimizing the risk of abrupt disinvestment.
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Key arguments before the SEC Working Group
During the meeting with the SEC's crypto asset group last week, Grayscale presented a series of arguments justifying the urgent need to update regulations and allow staking in Ethereum ETFs. The starting point was to highlight that current regulations do not reflect the reality of the market, where US ETFs do not fully represent the underlying ETH due to the staking ban, leaving investors at a disadvantage compared to international markets.
Grayscale emphasized that adopting this measure not only generates financial benefits for shareholders but also strengthens the Ethereum network, an argument that emphasizes the security and efficiency of the blockchain infrastructure. To mitigate any liquidity concerns, they proposed a multifaceted model that includes a special liquidity reserve, short-term funding options, and a credit line to overcome potential withdrawal tax periods, ensuring the ETF's operations can continue smoothly.
They also addressed potentially controversial issues such as tax implications and slashing risks, explaining that through agreements with specialized custodians and strict controls, these risks can be managed effectively with minimal exposure for investors.
Finally, Grayscale asked the SEC to consider the progress and maturity achieved by the cryptocurrency exchange-traded fund market, specifically Ethereum, appealing to equity with other jurisdictions that already allow this functionality and maintain high regulatory standards. The change in leadership at the SEC with the arrival of new Chairman Paul Atkins, considered more favorable toward cryptocurrencies, now opens a window of hope for this regulatory overhaul to materialize.
BUY ETHEREUM ON BIT2MEIn short, Grayscale not only seeks to unlock millions in rewards but could set a precedent for modern crypto market regulation in the United States, cementing Ethereum and its ETFs as a key institutional asset in the digital economy.
Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.
