SEC Delays Grayscale Ethereum ETF Staking Decision Until 2025

The U.S. Securities and Exchange Commission (SEC) has delayed its decision on a proposed rule change that would allow Grayscale’s spot Ethereum (ETH) exchange-traded funds (ETFs) to engage in staking on the Ethereum network. The regulator extended its deadline to approve or reject the proposal, or to begin proceedings on the matter, to June 1, 2025. This extension comes after the NYSE Arca applied on February 14 to secure regulatory approval for the Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF to participate in Ethereum's proof-of-stake validation system while maintaining existing custody protections. The SEC acknowledged the application nearly two weeks later.

Staking involves pledging cryptocurrencies to a network like Ethereum to help validate transactions, thereby enhancing the network's security. Users who stake their crypto on Ethereum receive Ethereum tokens as rewards. The SEC's decision to postpone its ruling on NYSE Arca’s staking plan, which was initially deemed risky, comes at a time of significant turbulence in the cryptocurrency market and escalating trade tensions between Washington D.C. and Beijing.

The digital asset market has experienced a decline in value over the past month, with Ethereum’s price falling. The SEC's decision to extend the deadline for its ruling on the staking proposal has raised questions about the likelihood of approval for Grayscale’s Ethereum ETFs. The regulator has shown increasing friendliness towards cryptocurrencies under the current administration, welcoming a new pro-digital assets chairman and dismissing several cases against crypto companies.

ETF experts have predicted that the regulator will allow issuers of spot Ethereum ETFs to participate in staking on the Ethereum blockchain by the end of 2025. The Commission's approval of Ethereum ETF options earlier this month may indicate a positive outlook for the approval of NYSE Arca’s staking proposal. However, the final decision remains uncertain, and the market will closely monitor the SEC's actions in the coming months.