SEC's Staking Delay Costs U.S. ETFs $61M as Global Rivals Lead

Grayscale Investments, the largest digital asset manager in the U.S., is poised to stake a portion of its 1.5 million ETH holdings from its Ethereum Trust (ETHE) and Ethereum Mini Trust (ETH) ETFs, according to on-chain analytics firm Arkham. Recent transactions, including the movement of over 40,000 ETH in batches of 3,200 ETH each—equivalent to 100 validators—strongly indicate preparations for staking activities [1]. If executed, this would mark the first time a U.S. Ethereum ETF engages in staking, potentially generating up to $276 million in annual rewards at a 3–4% yield [1].

The U.S. Securities and Exchange Commission (SEC) has delayed its decision on Grayscale’s staking proposal until June 1, 2025, with a final ruling set for October 2025 [2]. This delay, alongside postponed approvals for in-kind redemption proposals from WisdomTree and VanEck, has left U.S. investors unable to access staking rewards for Ethereum ETFs, unlike their counterparts in Hong Kong, Canada, and Europe [3]. Grayscale estimates that U.S. Ethereum ETFs have lost $61 million in potential staking rewards since their launch, highlighting the competitive disadvantage created by regulatory inaction [4].

Ethereum ETFs have attracted $2.28 billion in cumulative inflows since 2024, lagging significantly behind Bitcoin ETFs, which have drawn $35.4 billion [2]. Analysts suggest that enabling staking could enhance Ethereum ETFs’ appeal by offering yield generation, a feature critical for attracting institutional investors. Annual staking yields on platforms like Coinbase and Kraken range from 2.37% to 7%, depending on the service [3]. Grayscale’s proposed “point-and-click” staking model aims to simplify the process while maintaining custody control, aligning with proof-of-stake (PoS) network requirements [5].

The SEC’s delay reflects broader regulatory uncertainty around crypto assets. While the agency approved options trading for Ethereum ETFs in April, it has not yet resolved whether staking constitutes a securities violation. Grayscale’s proposal emphasizes compliance by avoiding “delegated staking” models and not guaranteeing returns [4]. Meanwhile, other firms, including BlackRock and 21Shares, have also submitted staking applications, signaling growing industry demand for yield-enhancing features [2].

Ethereum’s supply dynamics may tighten if large-scale staking becomes widespread. Staking locks ETH into the network, reducing circulating supply and potentially supporting price appreciation. Grayscale’s 1.5 million ETH stash represents roughly 0.3% of Ethereum’s total supply, and its staking could set a precedent for other institutional holders. However, the SEC’s cautious stance and macroeconomic factors—such as U.S. interest rate expectations—remain key risks to adoption [4].

The regulatory landscape will likely shape Ethereum’s trajectory in the coming months. Grayscale’s April 21, 2025, meeting with the SEC’s Crypto Task Force underscored the urgency for clarity, with the firm advocating for alignment with global standards where staking is already permitted [5]. If approved, the move could catalyze a broader shift in how investors engage with Ethereum, blending traditional finance with blockchain’s yield-generating capabilities.