Grayscale Pushes for Ethereum ETF Staking as SEC Reviews Proposal

The Securities and Exchange Commission (SEC) has begun reviewing a proposal from NYSE Arca that could allow Grayscale's Ethereum-based exchange-traded funds (ETFs) to earn staking rewards. Filed on February 14 and published by the SEC on February 25, the proposal aims to integrate Ethereum staking into the Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF while maintaining strict custodial protections.

According to the filing, Grayscale intends to stake a portion of the ETF’s Ethereum holdings through trusted providers that are unaffiliated with the firm. This move would enable the ETFs to participate in Ethereum’s proof-of-stake (PoS) validation system, earning additional ETH rewards that would be considered as fund income. Importantly, the staked assets would remain under the custodian’s control, mitigating regulatory concerns around asset security.

Grayscale’s approach differs from past staking models that have drawn scrutiny from regulators. The company emphasizes that its ETFs will not engage in delegated staking or pool their Ethereum with other validators, reinforcing a commitment to compliance. This proposal follows a wave of ETF applications from Grayscale, including those for XRP, Cardano, and Polkadot, as the firm broadens its crypto investment offerings.

The regulatory landscape could be shifting as market participants anticipate potential changes under a future administration. Industry players are positioning themselves for a more favorable SEC stance, particularly if leadership transitions after the upcoming election.

If approved, this move would mark a significant step in aligning Ethereum-based ETFs with the network’s evolving PoS model, further bridging traditional finance with the crypto ecosystem. The SEC now has 45 days to decide on the proposal, unless an extension is granted for further review.