- SEC reviews Grayscale’s Ethereum ETF staking proposal; decision expected by May 26, 2025.
- Grayscale aims to introduce staking rewards without altering custody; Coinbase Custody to secure ETH holdings.
The U.S. Securities and Exchange Commission (SEC) is reviewing a proposal to allow staking within Grayscale’s Ethereum Exchange-Traded Funds (ETFs). If approved, this move could introduce staking rewards to Grayscale’s Ethereum Trust ETFs.
The regulatory body has set an initial 45-day review period, which could extend up to 90 days, with a final decision expected by May 26, 2025. This development follows a broader trend in regulatory engagement with cryptocurrency-based financial products.
SEC Reviews Grayscale’s Ethereum Staking in ETFs Proposal
Grayscale’s proposal, filed by NYSE Arca on February 14, 2025, seeks approval to enable staking within the Grayscale Ethereum Trust ETF and the Grayscale Ethereum Mini Trust ETF. According to the filing, the ETFs would stake Ethereum through verified providers while ensuring that staked assets remain separate from pooled staking services. Coinbase Custody will continue to secure the funds’ Ethereum holdings, maintaining existing security protocols.
The SEC has acknowledged the filing and initiated a public comment period as part of its review. The agency’s decision will be based on investor protection measures, regulatory compliance, and the potential classification of staking as an investment contract under securities law.
In March 2024, Grayscale initially sought approval for a similar staking model, following Fidelity’s lead, but faced delays due to regulatory complexities. The current review marks a renewed effort to integrate staking rewards into regulated investment products.
Regulatory Landscape and SEC’s Stance on Staking
The SEC’s position on staking has evolved amid increasing institutional interest. Historically, the agency has scrutinized staking under securities law, particularly regarding platforms that offer staking as a service. However, recent developments indicate a possible shift in regulatory perspectives.
Crypto journalist Eleanor Terrett wrote on X that the SEC has become “very, very interested” in staking and has been engaging with industry experts for further insights. She noted that this interest could influence ongoing lawsuits, including the SEC’s case against Consensys, which was sued over its MetaMask staking service.
As Ethnews reported, the SEC has also acknowledged a similar staking proposal from 21Shares for its Core Ethereum ETF (CETH). This suggests the agency is increasingly open to allowing staking within regulated investment vehicles, provided investor protection measures are in place. The 21Shares model ensures that Ethereum remains with a verified custodian and that staking is managed in a way that aligns with securities regulations.
Grayscale’s Expanding Crypto ETF Portfolio
Grayscale has also filed for a spot Cardano (ADA) ETF, which could offer institutional investors a regulated way to gain exposure to ADA. If approved, the ETF may launch by August 2025, expanding the firm’s cryptocurrency investment options. The SEC’s acknowledgment of the filing has fueled optimism, with analysts estimating a 64% chance of approval as the review process gets underway.
Meanwhile, Ethereum experienced a recent 10% decline, leading to $340 million in liquidations. Broader market trends, including Bitcoin’s 7% drop to $88,993, have added to concerns over regulatory uncertainty and investor sentiment.
With the SEC’s review process of Ethereum staking in ETFs underway, stakeholders are closely monitoring developments. The decision timeline includes an initial 45-day period, extendable up to 90 days, with a final ruling expected before May 26, 2025. The outcome could have significant implications for the future of staking within ETFs and the broader cryptocurrency market.
