SEC's Ethereum ETF Delays Hinge on Staking and Legal Classification

The U.S. Securities and Exchange Commission (SEC) has extended its review period for multiple Ethereum (ETH) exchange-traded fund (ETF) proposals, including applications from BlackRock, Fidelity, and Grayscale, with decisions now expected by October 2025. The regulator cited the need for additional time to evaluate market impact, regulatory clarity, and infrastructure readiness for staking-enabled products, a feature sought by several asset managers to generate yield for investors The Blockchain - (https://www.the-blockchain.com/2025/09/10/sec-postpones-ruling-on-blackrock-ethereum-etf-staking-decision/)^[1]. The delay follows a pattern observed in previous Ethereum ETF reviews, where the SEC has sought to bundle decisions to streamline its regulatory approach Coinography - (https://coinography.com/sec-delays-decision-on-ethereum-etfs-again-what-it-means-for-investors/)^[2].

A key factor in the SEC’s hesitation is the ongoing classification of Ethereum as a security or commodity. Unlike Bitcoin, which has been largely recognized as a commodity, Ethereum’s legal status remains ambiguous, complicating the approval process for ETFs. The commission has also raised concerns about market manipulation risks in crypto markets and the adequacy of custodial arrangements to handle large-scale institutional investment Coinography - (https://coinography.com/sec-delays-decision-on-ethereum-etfs-again-what-it-means-for-investors/)^[2]. These uncertainties contrast with the swift approval of Bitcoin spot ETFs in early 2024, which have attracted over $35.4 billion in inflows Coin Telegraph - (https://cointelegraph.com/news/sec-delays-decision-permit-staking-grayscale-eth-etfs)^[3].

Staking functionality, a critical differentiator for Ethereum ETFs, is under particular scrutiny. BlackRock’s iShares Ethereum Trust, for instance, seeks to allow investors to stake ETH within the fund, a move that could enhance institutional adoption by generating yield. However, the SEC has delayed rulings on staking-related proposals, including those from Grayscale and 21Shares, with deadlines pushed to October 2025. The agency has approved options trading for spot Ethereum ETFs from BlackRock, Bitwise, and Grayscale, but staking permissions remain pending Coin Telegraph - (https://cointelegraph.com/news/sec-delays-decision-permit-staking-grayscale-eth-etfs)^[3]. Annual staking yields on platforms like Coinbase and Kraken range between 2% and 7%, underscoring the potential appeal of such features Coin Telegraph - (https://cointelegraph.com/news/sec-delays-decision-permit-staking-grayscale-eth-etfs)^[3].

Market participants remain cautiously optimistic. Ethereum’s price has stabilized despite the delays, with some analysts attributing this to investor expectations of eventual approval. Institutional demand for Ethereum ETFs is strong, driven by the precedent set by Bitcoin ETFs and the growing institutional interest in crypto assets. Firms like BlackRock and Fidelity have emphasized that Ethereum ETFs would provide a regulated, accessible vehicle for exposure to ETH without direct custody risks Coinography - (https://coinography.com/sec-delays-decision-on-ethereum-etfs-again-what-it-means-for-investors/)^[2]. However, the absence of staking features in current spot ETFs has limited their inflows compared to Bitcoin counterparts, which have seen over $35.4 billion in cumulative inflows since January 2024 Coin Telegraph - (https://cointelegraph.com/news/sec-delays-decision-permit-staking-grayscale-eth-etfs)^[3].

The SEC’s final decision could have significant implications for Ethereum’s market dynamics. If approved, staking-enabled ETFs could attract new institutional capital, enhance Ethereum’s utility as a yield-generating asset, and provide regulatory clarity. Conversely, continued delays or rejections risk reinforcing perceptions of U.S. crypto regulation as unpredictable, potentially deterring broader adoption. The October 2025 timeline has become a focal point for market observers, with analysts noting that the SEC’s approach could set a precedent for future crypto ETF applications The Blockchain - (https://www.the-blockchain.com/2025/09/10/sec-postpones-ruling-on-blackrock-ethereum-etf-staking-decision/)^[1].