SEC Reviews Grayscale Proposal to Add Ethereum Staking to ETFs

Grayscale Investments and NYSE Arca recently met with the U.S. Securities and Exchange Commission (SEC) to discuss a proposal to introduce staking capabilities to their Ethereum exchange-traded products (ETPs). The meeting, held on April 21, 2025, involved discussions with the SEC’s Crypto Task Force regarding the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH).

During the meeting, Grayscale emphasized the significance of enabling staking within U.S. Ethereum investment products. They noted that Ethereum’s proof-of-stake (PoS) consensus mechanism provides a unique opportunity for investors to earn additional yield by participating in network validation. Currently, U.S.-based Ethereum ETPs manage over $8 billion in assets, with Grayscale’s funds representing nearly half of that figure. Grayscale pointed out that the absence of staking has resulted in over $61 million in unrealized rewards for investors, highlighting a gap in potential returns that could otherwise be captured.

Grayscale’s proposed model involves a “point-and-click” staking mechanism that aims to ensure ease of use for investors while maintaining robust asset custody. Under this model, asset managers would retain full control over the custody of Ethereum tokens, mitigating the custodial risks often associated with staking operations. The company argued that this structure aligns with both investor protection principles and the operational realities of PoS networks.

SEC Delays Decision on Ethereum Staking Amidst Regulatory Shifts

Originally expected by April 17, 2025, the SEC’s decision on Grayscale’s staking proposal has been postponed to June 1, 2025. The extension is intended to provide additional time for a comprehensive evaluation of the potential impacts of allowing staking in ETPs. The delay also coincides with the appointment of Paul Atkins as the new SEC Chair, a former commissioner known for his more crypto-friendly stance. Observers suggest that Atkins’ leadership could lead to more progressive regulatory approaches for digital assets.

Grayscale highlighted during the meeting that international jurisdictions, including Canada, Europe, and Hong Kong, have already approved staking functionalities within Ethereum ETFs. These precedents demonstrate the feasibility and benefits of incorporating staking rewards into traditional investment vehicles. By referencing these examples, Grayscale hopes to persuade the SEC to modernize its regulatory framework to better align with global standards.

The outcome of the SEC’s decision is expected to have significant implications for the future of crypto investment products in the U.S. Approval could pave the way for a broader range of staking-enabled offerings, potentially reshaping how institutional and retail investors engage with digital assets.