Grayscale Seeks SEC Approval to Enable Staking for Ethereum Trust ETFs

Investment manager Grayscale is in talks with the United States Securities and Exchange Commission (SEC) Crypto Task Force to advocate for allowing staking within Ethereum exchange-traded products (ETPs). Craig Salm, Grayscale Investments’ chief legal officer, expressed appreciation for the opportunity to engage with the SEC on this matter. 

Grayscale Advocates for Ethereum ETF Staking Approval

Representatives from Grayscale met with the agency’s Crypto Task Force on April 21 in Washington, D.C. The meeting focused on amending Form 19b-4 filings for the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH) to enable staking activities.

The investment manager mentioned that the U.S. Ethereum ETPs, which collectively manage $8.1 billion in assets, have missed out on approximately $61 million in staking rewards through February 2025. This figure does not include the potential daily compounding of rewards.

Grayscale noted that spot ETH ETPs do not fully represent the underlying ETH since they do not engage in staking. The firm emphasized the benefits of staking, explaining that participation would bolster the Ethereum network’s security while delivering additional returns to shareholders.

“Through staking, US ETH ETPs will participate in validating transactions on the Ethereum network, contributing to the security and efficiency of the Ethereum blockchain, and in return, earn ETH rewards,” the memorandum stated. 

Furthermore, Grayscale introduced a multi-layered strategy to manage potential liquidity concerns during unstaking periods. The strategy includes a “Liquidity Sleeve” and short-term financing options with custodians and liquidity providers. It also includes a revolving credit facility to handle redemption risks.

Global Precedent 

The asset manager noted that non-U.S. markets, like Europe and Canada, have already successfully integrated staking into ETPs without harming trading efficiency. These global precedents serve as real-world case studies demonstrating the feasibility and benefits of incorporating staking rewards into traditional investment vehicles. 

Referencing these examples, the firm asserted that it can effectively and responsibly stake ETH in its ETH ETPs. They cited connectivity and partnerships across the digital asset ecosystem as part of their operational safeguards to manage potential risks.

Initially, the SEC was expected to make a decision on Grayscale’s staking proposal by April 17, 2025. However, this timeline was extended to June 1, 2025.

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