Ether Price Surges 3.5% as 21Shares Files to Add Staking to Spot Ether ETF

The price of Ether (ETH) briefly spiked 3.5% after news broke that asset manager 21Shares, in collaboration with the CBOE BZX Exchange, filed a proposal to introduce Ether staking to its spot Ether exchange-traded fund (ETF). The announcement marked a significant development for the cryptocurrency market and potential institutional investors.

Ether's Price Reaction

Following the news, Ether's price surged from $2,709 to a high of $2,776 before pulling back to $2,729 at the time of publication, according to CoinMarketCap data. The sudden price movement highlights the market's positive reaction to the prospect of adding staking features to the popular Ether ETF product.

A First in the Market

If approved, 21Shares would become the first asset manager to incorporate Ether staking into a spot Ether ETF. The company plans to stake a portion of the ETF’s Ether holdings “from time to time” through trusted staking providers, as outlined in a February 12 filing with the U.S. Securities and Exchange Commission (SEC). The filing emphasized that this move would offer additional benefits to investors, allowing the Trust to better track returns associated with holding Ether.

In its filing, 21Shares outlined its approach to maintaining liquidity for the ETF to meet redemption demands, reassuring investors that they would still have access to their investments. Importantly, the company stated it would not advertise staking as part of the service nor promise specific returns. Additionally, 21Shares made it clear that it would not claim expertise in Ether staking, emphasizing that the decision to stake the Trust’s Ether is solely aimed at enhancing revenue generation opportunities for the fund.

Potential Benefits for Investors

For Ether ETF holders, the introduction of staking presents an enticing opportunity to earn rewards from their holdings. By staking some of the Ether within the ETF, investors could benefit from the rewards generated through the Ethereum network’s proof-of-stake mechanism. This move could make the ETF more attractive to institutional investors, especially those who have been hesitant about entering the Ether market.

A Game-Changer for Institutional Adoption

Crypto analysts view the development as a pivotal moment for Ethereum, with many suggesting that the approval of Ether staking in the ETF could help the asset class gain traction among institutional investors. Unlike Bitcoin, where institutional interest has surged thanks to products like Bitcoin ETFs, Ether has faced challenges in attracting similar institutional support. Many analysts attribute this disparity to difficulties in defining Ether’s unique value proposition in comparison to Bitcoin.

Ash Crypto, a popular crypto trader, expressed excitement over the potential impact of this move, calling it “massive for Ethereum” in a February 12 post on social media. This sentiment echoes broader industry expectations that the inclusion of staking in an Ether ETF could significantly boost the appeal of Ethereum to Wall Street and beyond.

Discussions and Industry Support

The push to add staking to Ether ETFs has been building for some time. Ethereum and ConsenSys co-founder Joe Lubin recently shared in a conversation with that discussions with ETF providers are ongoing. Lubin confirmed that efforts are already underway to get staking approved for spot Ether ETFs, further underlining the growing momentum behind this initiative.

If approved by the SEC, 21Shares' Ether staking proposal could open new doors for both retail and institutional investors, allowing them to access the benefits of staking while maintaining the liquidity and convenience associated with an ETF. The potential approval could mark a significant milestone in the evolution of Ethereum investment products and further solidify Ether’s role in the broader crypto landscape.

Looking Ahead

The success of this initiative depends on SEC approval, which is still pending. However, the growing excitement around Ether staking in ETFs signals the increasing maturation of the cryptocurrency market and the evolving strategies being employed to attract institutional capital. Should 21Shares’ proposal gain approval, it could pave the way for other asset managers to follow suit, potentially reshaping the future of Ether investment products.