Ethereum News Today: BlackRock Seeks SEC Approval for 3.5% Yield Staking in Ethereum ETF, Amid $16.5B AUM Surge

BlackRock Inc. has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to enable staking within its Ethereum (ETH) spot exchange-traded fund (ETF), a move that could redefine institutional engagement with crypto assets. The filing, processed via Nasdaq on July 16, 2025, seeks approval to stake a portion or all of the ETF’s ETH holdings through trusted staking service providers, generating yield under Ethereum’s proof-of-stake model. This initiative, first reported by the Hyper Bit community, aligns with a broader surge in Ethereum ETF adoption, with U.S. spot Ether ETFs amassing $16.5 billion in assets under management following $8.7 billion in net inflows over a year [2].

The staking feature, if approved, would allow the ETF to generate additional returns for investors through network validation rewards, potentially yielding 3.5% annually. This innovation positions Ethereum to compete with traditional income-generating assets like government bonds and dividend-paying stocks for the first time. Institutional demand for Ethereum exposure has been robust, with over $5.5 billion flowing into ETH ETFs recently, including $3.3 billion in the last three months. BlackRock’s iShares Ethereum Trust (ETHA) has emerged as a leading vehicle in this trend, reflecting growing appetite for regulated crypto products enhanced by staking returns.

The SEC’s approach to staking within ETFs has shifted in recent months. While prior applications excluded staking due to regulatory concerns, recent approvals for Coinbase and Kraken to offer staking services have set a precedent. Analysts view BlackRock’s filing as a strong signal that the agency may broadly endorse staking in Ethereum ETFs by Q4 2025, ahead of the firm’s final filing deadline in April 2026. However, regulatory scrutiny remains focused on custody protocols for staking rewards, which require secure private key management to mitigate counterparty risks.

Market dynamics further underscore the significance of this proposal. Ethereum ETFs attracted $602 million in a single day on July 17, outpacing Bitcoin ETFs, which recorded neutral net flows during the same period [3]. BlackRock’s ETHA fund has led this inflow surge, leveraging its track record with the iShares Bitcoin Trust (IBIT), which has legitimized crypto as an asset class. Analysts note that BlackRock’s influence in navigating regulatory frameworks could accelerate broader adoption of staking-enabled products.

Despite progress, uncertainties persist regarding the IRS’s tax treatment of staking rewards within ETFs. The lack of clarity on how these rewards will be classified compared to other ETF earnings could delay implementation or affect investor adoption. If resolved favorably, the feature could establish Ethereum as a “second bitcoin” for institutional investors, combining capital appreciation with recurring income.

Projections suggest that staking-enabled ETFs may drive Ethereum’s price higher. Analysts predict potential price targets of $4,200 or $5,000 in the next rally phase, driven by increased institutional participation and yield generation. This aligns with broader expectations of a crypto bull market in 2025, fueled by regulatory clarity and expanding product offerings. Grayscale’s recent Digital Large Cap fund approval, alongside applications for Ethereum and XRP ETFs, highlights the SEC’s growing role in shaping the crypto asset management landscape.

Critics caution that staking introduces operational risks, such as liquidity constraints or security vulnerabilities if custodians mismanage rewards. The SEC may require detailed disclosures to address these concerns, emphasizing investor protection. Meanwhile, BlackRock’s application could set a precedent for other asset managers, accelerating innovation in crypto ETFs.

The potential approval of this feature marks a pivotal moment in the maturation of crypto ETFs, bridging traditional finance and decentralized protocols. By integrating staking, BlackRock aims to enhance Ethereum’s utility and appeal, reinforcing its position as a market leader in crypto innovation.

Source: [1] [Hyper Bit purchases Ethereum as treasury asset](https://www.facebook.com/groups/144****386265744/posts/4048137****53566/) [2] [Spot Ether ETFs hit $16.5B AUM after 1-year surge](https://www.ainvest.com/news/ethereum-news-today-spot-ether-etfs-hit-16-5b-aum-1-year-surge-driven-8-7b-inflows-2507/) [3] [Ethereum ETFs Attract $602M in Single Day Surpassing Bitcoin](https://www.ainvest.com/news/ethereum-news-today-ethereum-etfs-attract-602m-single-day-surpassing-bitcoin-time-2507/)