The Fight for Ethereum Staking in U.S. ETPs: Grayscale Takes on the SEC
Grayscale Lobbies SEC for Approval of Ethereum ETF Staking
Here's the lowdown:
Table of Contents
- Grayscale meets SEC's Crypto Task Force to advocate for Ethereum ETF staking
- U.S. Ethereum ETPs leaving $61 million in potential rewards on the table
- Grayscale's novel "point-and-click" staking model and safety measures
- Global markets beating the U.S. to the Ethereum staking punch
- Regulatory delay, leadership change, and the future of U.S. crypto investing
Grayscale Investments is pushing hard for staking capabilities in Ethereum exchange-traded products (ETPs) within the U.S. They're making this argument to the U.S. Securities and Exchange Commission (SEC), believing that investors are losing out big-time while competitors storm ahead globally.
On April 21, Grayscale had a sit-down with the SEC's Crypto Task Force in Washington D.C. The agenda? Lobbying for changes to Form 19b-4 filings for the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH) to allow staking activities.
Why all the fuss? Well, U.S. Ethereum ETPs—which collectively manage a whopping $8.1 billion—have missed out on approximately $61 million in staking rewards since launch, through February 2025. That's a hefty slice of the pie. Craig Salm, Grayscale's chief legal officer, thanked the SEC for the discussion, stressing the importance of giving U.S. Ethereum ETPs the same staking capabilities as their international counterparts.
Grayscale proposed a slick, user-friendly "point-and-click" staking model with a multi-layered liquidity strategy. This clever scheme aims to address potential risks during unstaking periods, using tools such as a "Liquidity Sleeve," short-term financing options, and a revolving credit facility.
"By staking," Grayscale explained, "U.S. 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."
Staking Overseas: The Green Pastures
Grayscale pointed out that multiple international jurisdictions have already integrated staking into their Ethereum ETPs. Markets in Europe, Canada, and Hong Kong were singled out as successful examples where staking functionality has been implemented without a hitch.
These examples serve as real-world case studies, demonstrating the feasibility and benefits of incorporating staking rewards into traditional investment vehicles. By referencing these instances, Grayscale hopes to persuade the SEC to re-evaluate its stance.
The SEC pushed back their decision date, announcing that they would make a decision on Grayscale's staking proposal on June 1, 2025, rather than the original April 17 date. This delay comes as Paul Atkins, a former commissioner known for his more crypto-friendly leanings, takes office as the new SEC Chair.
Some market observers speculate that Atkins' leadership could lead to more progressive digital asset regulations. Grayscale's pitch arrives at a crucial time—with the U.S. crypto investing landscape evolving rapidly—as the decision could have far-reaching consequences for both institutional and retail investors engaged with digital assets through regulated investment products.
The final call, expected by June 1, will determine whether U.S. investors will be able to access the same yield-generating opportunities that investors in other markets enjoy through similar financial products. Stay tuned!
- Grayscale Investments seeks to enable staking capabilities in Ethereum exchange-traded products (ETPs) within the U.S, contending that investors are forfeiting significant potential rewards while global competitors advance.
- The U.S. Securities and Exchange Commission (SEC) has scheduled a decision date on June 1, 2025, to review Grayscale's proposal for adding staking activities to the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH).
- Grayscale's proposed solution includes a user-friendly "point-and-click" staking model with a sophisticated multi-layered liquidity strategy, intending to mitigate risks during unstaking periods.
- By staking, U.S. Ethereum ETPs would participate in validating transactions on the Ethereum network, bolstering security and efficiency while earning ETH rewards.
- Successful instances of staking integration in international jurisdictions such as Europe, Canada, and Hong Kong have been highlighted by Grayscale as compelling evidence of the feasibility and benefits of incorporating staking rewards into traditional investment vehicles.
