SEC Reviews Grayscale's Ethereum Staking ETF Proposal

The U.S. Securities and Exchange Commission (SEC) is currently reviewing a proposal submitted by NYSE Arca on February 14, 2025, seeking regulatory approval for staking activities within Grayscale’s Ethereum Exchange-Traded Fund (ETF). The decision is expected before May 26, 2025.

The proposal aims to allow Grayscale’s Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF to engage in staking through trusted providers. This would enable the funds to earn staking rewards without altering the existing custody arrangements. The staking process would be managed solely by the ETF’s sponsor, ensuring that staked ETH is not pooled with other entities or marketed as a staking service. Coinbase Custody will continue securing the fund’s Ethereum holdings, maintaining the current security framework.

The SEC’s review includes a public comment period, with an initial 45-day decision timeline that could extend up to 90 days. If approved, the move could introduce staking rewards as an additional feature for Ethereum ETF investors.

Grayscale has been exploring the addition of staking to its Ethereum ETF for some time. In March 2024, the company proposed a similar staking structure following Fidelity’s initiative, but regulatory complexities delayed its approval. The SEC has previously raised concerns about staking, particularly regarding whether it qualifies as an investment contract under U.S. securities laws. However, recent reports indicate that the agency is actively engaging with industry players to better understand the different forms of staking and their benefits.

The SEC’s acknowledgment of Grayscale’s Ethereum staking proposal comes amid other crypto-related regulatory developments. The agency recently accepted a similar proposal from 21Shares for staking in its Core Ethereum ETF, suggesting a growing interest in integrating staking into regulated investment products. Additionally, the SEC has started reviewing Grayscale’s filing for a spot Cardano (ADA) ETF, which, if approved, would allow investors to gain exposure to Cardano without directly holding the asset. This filing is part of Grayscale’s broader strategy to expand its cryptocurrency ETF offerings beyond Bitcoin and Ethereum.

With the SEC’s review process underway, investors and industry stakeholders are closely watching for updates. The decision timeline includes an initial 45-day period, which may be extended to 90