US SEC Reviews Grayscale Ethereum ETF Staking Proposal Decision

The U.S. Securities and Exchange Commission (SEC) is reviewing a proposal to allow staking in Grayscale’s Ethereum Exchange-Traded Fund (ETF), with a decision expected before May 26, 2025.

The filing, submitted by NYSE Arca on February 14, 2025, seeks regulatory approval for staking activities within the Grayscale Ethereum Trust ETF and the Grayscale Ethereum Mini Trust ETF.

US SEC Acknowledges Grayscale’s Staking Proposal

According to a filing, the US SEC has acknowledged the proposed rule change, which would permit Grayscale’s Ethereum ETFs to stake Ethereum through trusted providers. This would allow the funds to earn staking rewards without altering the existing custody arrangements.

According to the report, the staking process would be managed solely by the ETF’s sponsor, ensuring that staked ETH is not pooled with other entities or marketed as a staking service. Coinbase Custody will continue securing the fund’s Ethereum holdings, maintaining the current security framework.

The SEC’s review includes a public comment period, with an initial 45-day decision timeline that could extend up to 90 days. If approved, the move could introduce staking rewards as an additional feature for Ethereum ETF investors.

Regulatory History and Industry Considerations

Grayscale has been exploring the addition of staking to its Ethereum ETF for some time. In March 2024, the company proposed a similar staking structure following Fidelity’s initiative, but regulatory complexities delayed its approval.

The SEC has previously raised concerns about staking, particularly regarding whether it qualifies as an investment contract under U.S. securities laws. However, recent reports indicate that the agency is actively engaging with industry players to better understand the different forms of staking and their benefits.

Eleanor Terrett, a journalist, stated on X (formerly Twitter) that the SEC has shown a “very, very interested” stance on staking and has been asking industry experts for additional insights.

She said’

“Given the SECGov’s newfound interest in staking, it seems logical that it will also reconsider its lawsuit against Consensys, which it sued last year over its @MetaMask staking service. The SEC also alleged Consensys had been operating as an unregistered broker, the same claim it’s now dropping against Coinbase.”

Market Developments and Grayscale’s Cardano ETF

The SEC’s acknowledgment of Grayscale’s Ethereum staking proposal comes amid other crypto-related regulatory developments. The agency recently accepted a similar proposal from 21Shares for staking in its Core Ethereum ETF, suggesting a growing interest in integrating staking into regulated investment products.

Additionally, the SEC has started reviewing Grayscale’s filing for a spot Cardano (ADA) ETF. If approved, it would allow investors to gain exposure to Cardano without directly holding the asset. This filing is part of Grayscale’s broader strategy to expand its cryptocurrency ETF offerings beyond Bitcoin and Ethereum.

Meanwhile, the SEC has dropped its investigation into Robinhood’s crypto unit and the Uniswap exchange, indicating a shift in its regulatory approach. These decisions may influence how the agency evaluates staking within ETFs.

With the SEC’s review process underway, investors and industry stakeholders are closely watching for updates. The decision timeline includes an initial 45-day period, which may be extended to 90 days based on regulatory considerations.

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