Ethereum Staking ETF Bridges Traditional Finance and Blockchain with Direct Yield Distribution

REX-Osprey™, a joint venture between REX Shares and Osprey Funds, has launched the REX-Osprey™ ETH + Staking ETF (ticker: ESK), marking the first U.S.-listed 1940 Act ETF to offer investors exposure to Ethereum (ETH) combined with monthly staking rewardsREX-Osprey Launches First Ethereum Staking ETF in the U.S.^[1]. The fund provides access to spot Ethereum via a traditional ETF structure while distributing staking yields to investors, a feature absent in prior crypto-related productsREX-Osprey™ Launches First Ethereum Staking ETF in the US^[2]. ESK’s structure involves a mix of directly staked ETH and other exchange-traded products that hold and stake ETH, with all staking rewards passed directly to shareholders without retention by the firmREX-Osprey Launches First Ethereum Staking ETF in the U.S.^[1]. This innovation builds on the success of the REX-Osprey™ Solana + Staking ETF (SSK), which debuted in July 2025 and has since amassed over $300 million in assets under managementREX-Osprey™ Launches First Ethereum Staking ETF in the US^[2].

The launch of ESK reflects growing institutional interest in crypto staking, a mechanism that allows investors to earn rewards by participating in Ethereum’s proof-of-stake networkREX-Osprey Launches First Ethereum Staking ETF in the U.S.^[1]. Greg King, CEO of REX Financial, emphasized that ESK bridges traditional finance and crypto by enabling investors to access Ethereum’s returns and staking benefits through a familiar ETF formatREX-Osprey Launches First Ethereum Staking ETF in the U.S.^[1]. The fund’s structure, however, introduces unique risks. Ethereum’s price volatility, regulatory uncertainty, and the technical complexities of staking—such as illiquidity during staking periods and exposure to smart contract vulnerabilities—pose significant challengesREX-Osprey Launches First Ethereum Staking ETF in the U.S.^[1]. Additionally, the fund’s non-diversified nature and concentration in the Ethereum ecosystem amplify its sensitivity to market downturns or network disruptionsREX-Osprey Launches First Ethereum Staking ETF in the U.S.^[1].

Ethereum’s price dynamics further complicate the fund’s outlook. As of late September 2025, ETH traded below $4,000, a 19% decline from its all-time high in AugustEthereum drops below $4,000 as Rex-Osprey launches first ETF …^[3]. This volatility has led to $296 million in Ethereum ETF outflows since mid-SeptemberEthereum drops below $4,000 as Rex-Osprey launches first ETF …^[3], signaling cautious investor sentiment. Analysts attribute this to factors such as institutional treasuries purchasing crypto near market peaks and competition from alternative blockchain networksEthereum drops below $4,000 as Rex-Osprey launches first ETF …^[3]. Despite these headwinds, REX-Osprey’s ESK represents a strategic expansion of the firm’s crypto offerings, following its XRP and Dogecoin ETFsEthereum drops below $4,000 as Rex-Osprey launches first ETF …^[3].

The fund’s legal structure also diverges from conventional ETFs. By combining a C-corporation designation with Cayman Islands-based subsidiaries, ESK bypasses the SEC’s 19b-4 approval process for spot ETFs, accelerating its market entryREX Shares Files Innovative ETFs for ETH, SOL Staking^[4]. While this structure enables compliance with staking income tax rules, it introduces corporate tax inefficienciesREX Shares Files Innovative ETFs for ETH, SOL Staking^[4]. The Cayman route also sidesteps U.S. restrictions on grantor trust ETFs engaging in staking, though its long-term viability depends on IRS guidanceREX Shares Files Innovative ETFs for ETH, SOL Staking^[4].

Ethereum’s broader ecosystem faces regulatory and technological hurdles. The SEC’s recent approval of the Hashdex Nasdaq Crypto Index US, which includes Ethereum and Bitcoin, signals cautious regulatory acceptanceEthereum drops below $4,000 as Rex-Osprey launches first ETF …^[3]. However, the lack of a unified global framework for crypto assets remains a risk. Meanwhile, Ethereum’s transition to proof-of-stake in 2022 has not yet resolved concerns about validator centralization, with “whales” holding significant sway over price movementsREX-Osprey Launches First Ethereum Staking ETF in the U.S.^[1].