Staking Yield May Soon Be Approved for US Ethereum ETFs, Bernstein Says

Ethereum (ETH) exchange-traded funds (ETFs) in the United States may soon offer staking yield, according to a Dec. 2 report from Bernstein Research. The firm believes that under a more crypto-friendly Securities and Exchange Commission (SEC), such as one anticipated with a potential second-term presidency of Donald Trump, approval for Ethereum staking yield in ETFs could be on the horizon.

Ethereum Staking Explained

Staking involves locking up Ether as collateral with a validator on the Ethereum blockchain. In return, stakers earn rewards in the form of ETH, which come from network fees and other incentives. However, there is a risk of “slashing”, a penalty that occurs if a validator acts dishonestly or fails to fulfill their responsibilities.

As of Dec. 2, Ethereum staking offers an annualized percentage return (APR) of approximately 3.1% in ETH, according to StakingRewards.com. Bernstein's report also suggests that as network activity increases, staking yields could rise to 4-5%, making Ethereum staking even more attractive for investors.

The Potential Impact of a Crypto-Friendly SEC

While Ethereum spot ETFs were approved for trading in the U.S. in July 2023, the SEC has so far prohibited these funds from offering staking yield, despite requests from major firms like Fidelity, 21Shares, and Franklin Templeton. However, Bernstein sees a shift on the horizon.

The research firm points to the potential for a crypto-friendly SEC under the leadership of Donald Trump, who has expressed a commitment to making the U.S. the "world’s crypto capital" during his anticipated second presidential term, starting January 20, 2025. Bernstein suggests that if Trump taps crypto-friendly leaders for key financial regulatory roles, Ethereum staking approval could come sooner than previously expected.

Rising Interest in Ethereum

In addition to the potential for staking approval, Bernstein also views Ethereum as an increasingly attractive investment. The firm highlights a notable increase in investor interest in ETH, especially in comparison to Bitcoin (BTC), which has outperformed Ethereum in recent years.

Bernstein notes that Ethereum fundamentals appear strong, with a marked resurgence in ETF inflows, signaling a revival of interest in ETH. According to CoinShares, Ethereum investment funds have seen record net inflows of $2.2 billion in 2024, surpassing the previous record of $2 billion set in 2021. This turnaround in sentiment suggests a more positive outlook for Ethereum going forward.

Ethereum's Growing Investment Potential

The Ethereum network is expected to generate substantial financial growth in the coming years. Matthew Sigel, head of digital asset research at VanEck, predicts that by 2030, the Ethereum network could produce up to $66 billion in annual free cash flow, which could propel the price of spot ETH to as high as $22,000 per token.

This outlook, combined with Ethereum’s rising staking yields, makes ETH an increasingly compelling investment for both institutional and retail investors.

As the cryptocurrency market continues to evolve, developments like the approval of staking yield in Ethereum ETFs and Ethereum’s growing role in decentralized finance (DeFi) position the asset as a strong contender for long-term growth and adoption. Should the SEC shift its stance on staking yield, it would further solidify Ethereum’s place in the broader financial landscape, benefiting both investors and the network alike.