TLDR
- Grayscale met with SEC’s Crypto Task Force on April 21 to discuss adding staking to Ethereum ETFs
- Over $61 million in potential staking rewards have been missed by US investors
- Grayscale wants to update filings for its Ethereum Trust ETF (ETHE) and Ethereum Mini Trust ETF (ETH)
- The SEC has delayed its decision until June 1, 2025, coinciding with new Chair Paul Atkins taking office
- Comparable ETF products in Canada, Europe, and Hong Kong already allow staking functionality
US-based crypto asset manager Grayscale Investments is pushing the Securities and Exchange Commission (SEC) to permit staking capabilities for its Ethereum exchange-traded funds (ETFs), arguing that American investors are missing out on millions in potential rewards.
Representatives from Grayscale and NYSE Arca met with the SEC’s Crypto Task Force on April 21, 2025, to discuss amending Form 19b-4 filings for the Grayscale Ethereum Trust ETF (ETHE) and Grayscale Ethereum Mini Trust ETF (ETH). The goal is to enable these funds to participate in Ethereum’s proof-of-stake validation process.
According to Grayscale, US-based Ethereum ETPs currently manage over $8.1 billion in assets. Grayscale’s funds represent nearly half of that figure. The company claims investors have missed approximately $61 million in potential staking rewards since the ETFs launched through February 2025.
International Precedent
Grayscale highlighted that similar ETF products in Canada, Europe, and Hong Kong already permit staking functionality. These international examples demonstrate that staking can be successfully integrated into traditional investment vehicles without compromising trading efficiency.
Craig Salm, chief legal officer at Grayscale Investments, stated: “We appreciate the opportunity to engage with the Securities and Exchange Commission’s Crypto Task Force.” The company’s memorandum outlined their position that US Ethereum ETPs should be allowed to stake their holdings like their non-US counterparts.
The proposed staking mechanism would follow a “point-and-click” model designed to ensure ease of use while maintaining robust asset custody. Under this structure, asset managers would retain full control over the custody of Ethereum tokens, reducing custodial risks often associated with staking operations.
Network Benefits and Risk Management
Grayscale emphasized that staking participation would strengthen Ethereum’s network 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.
To address potential liquidity concerns during unstaking periods, Grayscale introduced a multi-layered strategy. This includes a “Liquidity Sleeve,” short-term financing options with custodians and liquidity providers, and a revolving credit facility to manage redemption risks.
The company also acknowledged potential tax implications and slashing risks but expressed confidence that operational safeguards and custody arrangements with Coinbase Custody would effectively manage these exposures.
Regulatory Timeline
The SEC has delayed its decision on Grayscale’s staking proposal until June 1, 2025. Originally expected by April 17, the extension provides additional time for a comprehensive evaluation of allowing staking in ETPs.
This delay coincides with Paul Atkins taking office as the new SEC Chair. Atkins, a former commissioner, is known for his more crypto-friendly stance, leading some observers to suggest his leadership could result in more progressive regulatory approaches for digital assets.
In its concluding arguments, Grayscale stressed the need for updated regulations that reflect the maturity of the Ethereum ETP market.
“Currently, spot ETH ETPs do not represent the underlying ETH completely, because they are not currently permitted to engage in staking,” the document explains.
