The Evolving Landscape of Blockchain ETFs: Staking-Enabled Structures and Their Impact on Yield and AUM Growth

The blockchain ETF market has undergone a seismic shift in 2023–2025, driven by the integration of staking-enabled fund structures. These innovations have redefined yield generation and assets under management (AUM) growth, attracting both institutional and retail investors. By enabling passive income through staking while maintaining regulatory compliance, providers like Grayscale, Bitwise, and ARK have reshaped the crypto investment landscape.

Grayscale: Pioneering Staking in U.S. ETFs

Grayscale has emerged as a trailblazer in staking-enabled blockchain ETFs, launching the first U.S.-listed spot crypto exchange-traded products (ETPs) with staking capabilities for Ethereum (ETHE, ETH) and Solana (GSOL). These products allow investors to earn staking rewards-estimated at 1.89% to 5.81% for Ethereum and 4.44% to 8–9% for Solana-while retaining exposure to the underlying asset's price movements, as detailed in Grayscale's staking announcement. To address liquidity challenges, Grayscale introduced a "Liquidity Sleeve," a pool of unstaked tokens that ensures smooth redemptions without disrupting staking operations.

The impact on AUM has been substantial. Grayscale's Ethereum Trust ETF (ETHE) and Solana Trust (GSOL) have attracted over $35 billion in assets under management, with the Solana SSK ETF alone surpassing $100 million in AUM. This growth reflects institutional confidence in staking as a yield-generating mechanism, particularly in a low-interest-rate environment.

Bitwise: Expanding Staking Horizons

Bitwise has further diversified the staking landscape by introducing staking services on Starknet, an Ethereum Layer 2 blockchain, and launching the Bitwise Ethereum ETF (ETHW) and Bitwise Bitcoin ETF (BITB). Bitwise's announcement on non-custodial Starknet staking outlined its approach to integrating Layer 2 staking into product offerings, aiming to broaden yield channels for investors (Bitwise Starknet staking). With $5.12 billion in AUM for BITB as of October 2025, Bitwise's low expense ratio of 0.20% has made it a cost-effective option for Bitcoin exposure. Meanwhile, ETHW, with $437.7 million in AUM, offers a 24.41% year-to-date (YTD) return, underscoring the appeal of Ethereum staking.

Bitwise's innovation extends beyond staking. The firm's Crypto Industry Innovators ETF (BITQ), which focuses on blockchain infrastructure companies, has delivered a 48.43% YTD return, highlighting the sector's growth potential. However, regulatory hurdles persist. The SEC's delayed approval of Bitwise's Ethereum staking ETF has raised concerns about liquidity risks and validator centralization, though the firm argues staking rewards align with traditional dividend structures.

ARK: Indirect Staking and Structural Innovation

ARK Invest has taken a different approach, indirectly accessing staking rewards by investing in third-party ETFs like 3iQ's Solana Staking ETF (SOLQ). The ARK Next Generation Internet ETF (ARKW) and ARK Fintech Innovation ETF (ARKF) now hold stakes in SOLQ, providing exposure to Solana's staking yields without direct on-chain participation. While ARK's flagship ARK Innovation ETF (ARKK) has $8.6 billion in AUM as of Q3 2025, its staking-enabled products like ARKB (ARK 21Shares Bitcoin ETF) focus on thematic exposure to blockchain-related companies rather than direct staking.

Structural innovation is a hallmark of ARK's strategy. The firm filed for four new structured ETFs-ARK Q1, Q2, Q3, and Q4 Defined Innovation ETFs-which aim to limit downside risk to 50% of any decline in ARKK while offering full upside participation above a 5% hurdle rate, as noted in the ARK filing. These products cater to investors seeking defined outcomes in a volatile market, reflecting ARK's adaptability to evolving investor demand.

Regulatory Dynamics and Market Implications

The SEC's evolving stance on staking has been a double-edged sword. While the agency clarified that protocol staking is not a securities transaction, it has delayed approvals for staking-based ETFs like BlackRock's Ethereum product and Franklin Templeton's XRP/Solana offerings, creating regulatory ambiguity. Some industry experts have criticized the SEC's inconsistent approach, as discussed in SEC pushback. However, the agency's development of a generic listing framework for token-based ETFs suggests a path toward streamlined approvals in the future.

The Future of Staking-Enabled ETFs

The convergence of staking, regulatory clarity, and institutional demand is set to redefine crypto investing. Grayscale's liquidity sleeve model, Bitwise's Layer 2 staking, and ARK's structured ETFs exemplify how providers are addressing liquidity, yield, and risk management. As Solana's SSK ETF and Ethereum's staking queue show increased long-term holder participation, the market is poised for further innovation.

For investors, the key takeaway is clear: staking-enabled ETFs offer a compelling blend of capital appreciation and passive income, but their success hinges on navigating regulatory and operational complexities. With AUM growth outpacing traditional fixed-income instruments and yields rivaling those of high-yield bonds, the blockchain ETF space is no longer a niche-it's a cornerstone of modern portfolio strategy.