SEC Examines Proposed Ethereum ETF Staking Strategy by Grayscale
The U.S. Securities and Exchange Commission (SEC) is taking a closer look at Grayscale's proposition to introduce staking in its Ethereum Exchange-Traded Funds (ETFs). This proposal, initially submitted by NYSE Arca in February 2025, is aiming for approval for staking within the Grayscale Ethereum Trust ETF and the Grayscale Ethereum Mini Trust ETF.
Under this proposal, if approved, Ethereum staking would occur via reliable providers, allowing the funds to earn staking rewards without altering the existing custody structure. However, it's important to note that the ETF's sponsor would oversee the staking process for security purposes, and staked Ethereum would remain separate from other entities' holdings.
The SEC's decision is set to be revealed before May 26, 2025. Regulatory hurdles have delayed Grayscale's previous attempts to incorporate staking in its Ethereum ETF. In fact, the company proposed a similar staking structure in March 2024, but the SEC had concerns about the classification of staking under U.S. securities laws.
Despite these challenges, the SEC has been showing increased interest in staking lately. Recent reports suggest that the agency has collaborated with industry experts to better understand staking's role within the market, which may impact ongoing legal cases related to staking services.
Meanwhile, the SEC is also checking out Grayscale's proposal for a spot Cardano (ADA) ETF, pushing for a decision within an 180-day review window, with a final decision expected by August 2025. This follows delays in the SEC's decision-making process for Grayscale's Litecoin, Dogecoin, and XRP ETFs in March 2025, suggesting a more in-depth examination of altcoin-based ETFs.
If approved, the Cardano ETF would offer ADA trading on traditional stock exchanges, making it easier for investors to gain access to the asset and boost Cardano's market credibility. Successful approvals could pave the way for additional filings for smaller altcoin ETFs, while rejections might further lengthen the SEC's limitation on non-Bitcoin crypto products.
This review of Grayscale's ETF proposals holds significant importance for crypto-related financial products, with potential effects on the institutional appeal of ETFs, the legitimization of staking-integrated ETFs, and the regulatory trajectory of crypto ETF frameworks beyond Bitcoin.
- The SEC's decision on Grayscale's proposition to introduce staking in its Ethereum ETFs is scheduled for reveal before May 26, 2025, emphasizing the potential impact on the regulatory trajectory of crypto ETF frameworks beyond Bitcoin.
- The SEC has shown increased interest in staking, collaborating with industry experts to better understand staking's role within the market, which may impact ongoing legal cases related to staking services.
- Grayscale's proposal for a spot Cardano (ADA) ETF is under review, with a final decision expected by August 2025, suggesting a more in-depth examination of altcoin-based ETFs by the SEC.
- If approved, the Cardano ETF would offer ADA trading on traditional stock exchanges, potentially boosting Cardano's market credibility, and paving the way for additional filings for smaller altcoin ETFs, while rejections might further lengthen the SEC's limitation on non-Bitcoin crypto products in the finance sector.
