NYSE Seeks Approval for Grayscale's ETH Staking in Spot Ethereum ETFs

Grayscale, a leading asset management firm, is looking to expand its offerings in the cryptocurrency space by introducing staking to its spot Ethereum exchange-traded funds (ETFs). In a recent filing with the U.S. Securities and Exchange Commission (SEC) on February 14, Grayscale requested approval for its plan to stake Ether (ETH) within two of its ETFs: the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH).

A Push for Staking in Spot Ether ETFs

If approved, Grayscale will be able to stake the Ether held by these funds, generating staking rewards that would be considered income for the respective trusts. However, Grayscale has emphasized that it will not guarantee or promote specific returns to investors. The firm made it clear that its staking activities would not involve "delegated staking" or be part of a "staking as a service" offering.

The proposal aims to enhance the efficiency of the spot Ether ETFs by allowing them to exercise their rights to free additional Ether through staking, which, in turn, could help the funds better track the returns associated with holding Ether. Grayscale believes this will result in significant benefits for investors, improving the overall creation and redemption process of the funds.

The estimated staking reward rate for Ether is currently around 2.06%, according to crypto exchange Coinbase, providing potential additional returns for investors in Grayscale’s ETFs.

A Similar Proposal from 21Shares

Grayscale's move comes on the heels of a similar proposal filed by 21Shares, another prominent asset manager, seeking approval to introduce staking within its own spot Ether ETF. In January 2025, 21Shares filed the request with the CBOE BZX Exchange on behalf of the firm, asking the SEC for permission to stake Ether in its ETF.

Previously, when the SEC approved spot Ether ETFs in July 2024, issuers were required to remove the ability for the funds to earn staking rewards. As a result, 21Shares removed staking from its initial spot Ether ETF proposal in May 2024, just two months before the fund went live. However, with the potential for a more crypto-friendly SEC under a future Donald Trump administration, there is speculation that the SEC may now be more open to revisiting its stance on staking in spot crypto ETFs.

The Changing Regulatory Landscape

As the SEC continues to evolve its approach to cryptocurrency regulations, the issue of staking within crypto ETFs is gaining increasing attention. According to industry sources, including Jito and Multicoin Capital, the SEC may be more willing to reconsider its previous stance on staking, particularly in light of new applications for exchange-traded products (ETPs) based on other crypto assets, such as Solana (SOL).

Grayscale’s push to incorporate staking into its spot Ether ETFs could mark a significant shift in the regulatory landscape, potentially paving the way for other asset managers to follow suit. If successful, this move would represent a growing trend of mainstream financial institutions embracing the cryptocurrency space, providing investors with more ways to participate in the rapidly evolving digital asset market.

Looking Ahead

The outcome of Grayscale’s proposal could have major implications for the future of Ethereum-based investment products. With the SEC’s stance on crypto asset management still in flux, industry stakeholders are watching closely to see how the regulatory body will respond to these applications for staking.

Should the SEC approve staking in spot Ether ETFs, it could provide a much-needed boost to institutional investment in Ethereum, enhancing both liquidity and returns for investors while further integrating digital assets into the traditional financial system. For now, the crypto industry remains optimistic that a more crypto-friendly regulatory environment may soon allow the full potential of Ethereum and other digital assets to be realized in mainstream financial products.