Ethereum News Today: BlackRock Files to Add Staking to iShares Ethereum ETF

Nasdaq has filed an application with the US Securities and Exchange Commission (SEC) on behalf of BlackRock to add staking to the asset manager’s iShares Ether (ETH) exchange-traded fund (ETF). This move, if approved, would allow the fund to provide investors with exposure to staking rewards accrued from using the underlying Ether as collateral security for Ethereum’s proof-of-stake consensus algorithm.

In May, the SEC released guidance classifying staking rewards earned from validation services on proof-of-stake blockchain networks as earned income rather than securities transactions subject to capital gains tax. This guidance opened the doors for institutional investors to earn yield on their ETH holdings, a major feature for traditional financial institutions that must produce income or cash flow for shareholders.

The application to amend the BlackRock iShares Ethereum ETF to include staking rewards is a strategic decision that reflects the growing interest in cryptocurrencies and blockchain technology. It also underscores the importance of innovation in the financial industry, as traditional asset managers seek to stay competitive in a rapidly evolving market. The proposal, if approved, could set a precedent for other ETFs to incorporate staking and other blockchain-based features, potentially leading to a new wave of innovation in the ETF market.

This development is part of a broader trend in the financial industry where traditional asset managers are exploring ways to integrate cryptocurrencies and blockchain technology into their investment products. The inclusion of staking in the iShares Ethereum Trust ETF could have significant implications for the ETF market. It would provide investors with a new way to gain exposure to Ethereum while also earning additional income through staking rewards. This could make the ETF more attractive to a wider range of investors, including those who are interested in both the potential price appreciation of Ethereum and the passive income generated through staking.

Ethereum starts to look like a hybrid between tech equity and digital currency, appealing to treasury strategists looking beyond passive storage. This is reflected by the rising demand for ETH, as seen in strong ETF flows during June and July, following stunted performance earlier this year due to macroeconomic fears and a flight to safety from risk assets.

Attracting institutional interest is a major priority for the revamped Ethereum Foundation, which backed the creation of a marketing firm tasked with exposing institutional investors to the layer-1 smart contract network. The amount of staked ETH reached a new all-time high in July, accounting for over 29% of the circulating supply. This rising demand for ETH is also reflected by strong ETF flows during June and July, following stunted performance earlier this year due to macroeconomic fears and a flight to safety from risk assets.