"SEC Opens Door to Staking in Ethereum ETFs"

The US Securities and Exchange Commission (SEC) has acknowledged a filing from Cboe BZX Exchange on behalf of 21Shares, which could pave the way for staking in Ethereum ETFs. This move signals a shift in regulatory attitudes towards staking, particularly under the Trump administration, which has shown a willingness to revisit previous SEC positions on crypto-related financial products.

The filing, submitted under Rule 19b-4, seeks approval for the 21Shares Core Ethereum ETF to generate additional yield through staking. If approved, this would enable the fund to provide an additional yield stream for investors beyond simple price appreciation. The filing states that all staked ETH would remain the exclusive property of the ETF trust, meaning the staking process would not involve third-party delegation or a "staking as a service" model.

This development comes amid a broader reassessment of staking regulations. Under former SEC Chair Gary Gensler, the agency maintained that proof-of-stake (PoS) tokens were securities, leading many fund issuers to exclude staking from their ETF proposals when spot Ethereum ETFs were first approved last summer. However, the regulatory landscape has started to shift, with discussions surrounding whether staking should be viewed as a commodity-based activity rather than a security-linked function.

If the SEC ultimately grants approval, staking-enabled ETFs could provide institutional and retail investors with a more lucrative Ethereum investment structure, possibly leading to a wave of similar filings by other fund issuers. The push for staking in Ethereum ETFs coincides with a notable increase in institutional interest in these funds, with institutional ownership surging from 4.8% to 14.5% in Q4 2024.

The SEC’s acknowledgment of 21Shares’ filing does not mean immediate approval, but it is a key procedural step in advancing the proposal. The regulator will now seek public comments and conduct a thorough review before making a final decision. If approved, Ethereum staking within ETFs could set a precedent for broader adoption, potentially influencing other issuers to follow suit and investors to favor Ethereum ETFs over Bitcoin ETFs due to their yield-generating capabilities.

Market participants are closely watching the SEC’s decision-making process, as approval could spur additional capital inflows into Ethereum ETFs