Grayscale Seeks SEC Nod for Ethereum Staking in ETFs

The New York Stock Exchange (NYSE) has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) on behalf of Grayscale, seeking approval for staking in its spot Ethereum exchange-traded funds (ETFs). If approved, Grayscale will be allowed to stake Ether (ETH) within the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH).

Grayscale's filing, dated February 14, states that the asset manager will earn staking rewards from any staking activity the funds engage in, which will be considered income for the funds. However, Grayscale has not guaranteed or promoted any specific level of returns for investors. The filing also clarifies that the staking activities will not constitute "delegated staking" and will not be part of a "staking as a service" offering.

Grayscale believes that allowing the trusts to stake their Ether would benefit investors by permitting the trusts to exercise their rights to free additional Ether and help the trusts better track the returns associated with holding Ether. According to crypto exchange Coinbase, the estimated staking reward rate for Ether is 2.06%.

This proposal comes just days after asset manager 21Shares filed a similar proposal for staking within its spot Ether ETF, with CBOE BZX Exchange applying to the SEC on its behalf. Before the SEC approved spot Ether ETFs in July 2024, it asked issuers to drop staking plans from their proposals. However, with a more crypto-friendly SEC under the Donald Trump administration, this policy could potentially be reversed.

Grayscale's proposal highlights the growing interest in staking within the crypto industry and the potential benefits it can bring to investors. As the SEC continues to review and approve new proposals, the crypto market awaits further developments in this area.