- SEC extends deadline to decide on Ethereum ETF staking rule
- No public comments received on NYSE Arca’s staking proposal
- Grayscale proposal could reshape ETF yield with staking rewards
The U.S Securities and Exchange Commission (SEC) has extended its review of the proposed rule change on Grayscale’s Ethereum ETF. The proposal aims to offer staking features to Ether assets held by the Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF. The Commission has extended the review process to June 1, 2025.
Ethereum ETFs Proposed Rule Change
On February 14, 2025, NYSE Arca submitted the proposal to the SEC under Section 19(b)(1) of the Securities Exchange Act. The proposed amendment aims to support staking of Ether assets held by Grayscale ETFs. On March 3, 2025, the Commission issued the notice for public feedback.
The proposed rule change did not receive comments from the public at the time of the review period. The initial 45-day review period would end on April 17, 2025. However, the SEC has extended the time to evaluate the proposal past the initial deadline.
The Commission announced the extension to allow more time for staff members to analyze regulatory and operational requirements as well as market implications. The proposal raises important questions about custodial management, validator operations, and returns from staking rewards. These factors must be analyzed properly to ensure market stability and protect investors.
Grayscale seeks to improve its Ethereum ETFs through a staking feature, which is connected to Ethereum’s proof-of-stake model. This modification will allow network contributors or the funds to earn rewards, which could enhance the returns for investors. NYSE Arca filed a proposal with the SEC to implement operational changes in the ETF structure.
SEC’s Jurisdiction Over Rule Change Proposals
The SEC has the power to approve or reject rule modifications as well as extend time limits for further review processes. The commission can extend the review process to 90 days to properly evaluate complex tasks. The Commission decided to extend its review duration for the Grayscale case.
Market analysts continue to monitor the SEC’s approach on crypto-linked financial products. The outcome of the review process could influence the evaluation of future applications on staking and decentralized finance protocols. A positive outcome will determine the future of Ethereum-based investment products.
The SEC has established June 1, 2025 as its new deadline to evaluate the market effects of its actions. However, this period of evaluation does not indicate approval or rejection status but provides more time to review the complete extent of the proposal. All procedures are conducted under the federal securities laws standards.
