- The SEC is reviewing Grayscale’s proposal to allow staking in its Ethereum ETFs.
- The decision is expected before May 26, 2025.
- The SEC has also started reviewing Grayscale’s Cardano ETF filing.
The U.S. Securities and Exchange Commission (SEC) is reviewing a proposal that allows staking in Grayscale’s Ethereum Exchange-Traded Funds (ETFs). The proposal was submitted by NYSE Arca on February 14, 2025. It seeks approval for staking within the Grayscale Ethereum Trust ETF and the Grayscale Ethereum Mini Trust ETF.
If approved, the proposal will enable Grayscale’s Ethereum ETFs to stake Ethereum using trusted providers. This will also allow the funds to earn staking rewards without changing their existing custody structure. The SEC’s decision is expected before May 26, 2025.
Interestingly, the ETF’s sponsor will manage the staking process to ensure security. Staked Ethereum will not be pooled with other entities or promoted as a staking service. Consequently, Coinbase Custody will continue securing the ETF’s Ethereum holdings to maintain regulatory compliance.
Regulatory History and SEC’s Considerations
Grayscale has previously explored staking for its Ethereum ETF, but regulatory challenges delayed the approval. In March 2024, the company proposed a similar staking structure after Fidelity introduced a comparable initiative. However, the SEC was particularly concerned about staking’s classification under the US securities laws.
Recently, the SEC has been increasingly emphasizing on staking. Journalist Eleanor Terrett reported that the agency has actively engaged with industry experts to understand staking’s role in the market. She stated that the SEC’s new focus could impact ongoing legal cases related to staking services.
The SEC’s interest in staking may influence its lawsuit against Consensys. The agency previously sued Consensys for operating its MetaMask staking service without registration. If the SEC approves Grayscale’s staking proposal, it could reconsider its regulatory approach toward staking providers.
Market Developments and Other ETF Filings
The SEC’s review of Grayscale’s staking proposal comes amid broader regulatory changes. The agency recently accepted a similar proposal from 21Shares for staking in its Core Ethereum ETF. This signals a growing acceptance of staking within regulated investment products.
Additionally, the SEC has commenced reviewing Grayscale’s spot Cardano (ADA) ETF application. If approved Cardano will be available to investors through the ETF even without them having to invest directly in the asset. This move is inline with Grayscale’s strategic direction of diversifying the category of cryptocurrencies exposed by the ETFs to other than Bitcoin and Ethereum.
However, crypto units of Robinhood and Uniswap have been excluded from the investigation by the SEC. This suggests a possible shift in its regulatory stance toward crypto-related financial products. Industry experts believe these decisions could influence how the agency evaluates staking within ETFs.
