🛑 SEC Delays Staking for Bitwise Ethereum ETF: What You Need to Know
📘 Introduction
The U.S. Securities and Exchange Commission (SEC) has officially postponed its decision on allowing staking functionality within Bitwise’s spot Ethereum ETF. This move, announced on June 30, 2025, signals increased regulatory scrutiny over blending traditional ETF structures with crypto-native yield mechanisms .
🔍 Background & Details
Original Plan: Bitwise proposed that its $ETH ETF not only hold Ethereum but also stake it to earn additional yield — a strategy they compare to dividend-generating equity funds .
What Staking Does: It secures the Ethereum network and generates ETH rewards. Implementing it within an ETF would enable passive investors to benefit without needing to delegate or self-custody .
Regulatory Concerns:
Slashing risk: Tokens could be penalized if validators fail consensus rules.
Liquidity mismatch: Staked ETH can’t exit the network instantly, raising red flags during market stress.
Centralization: Relying on a small set of validators could concentrate risk .
🗳️ Public Comment & Process
The SEC has started soliciting public feedback, focusing on whether staking introduces hidden risks incompatible with investor protection rules (e.g., sections under the Securities Exchange Act) . The agency is expected to make a final decision by July 6, 2025, unless further extensions occur .
💡 Market & Industry Implications
Bitwise’s Position: They argue staking rewards are akin to ETF dividends and won’t affect transparency or custody arrangements .
Regulatory Precedent: The SEC's careful pause reflects ongoing concerns. Rights-based offerings like Kraken’s staking services have already drawn SEC enforcement — raising the bar for similar products .
Rippling Effects: Should staking be approved, it could open the door to staking-enabled ETF products from other issuers. Meanwhile, others, such as Rex-Osprey, are advancing with staking ETFs for other assets (e.g. Solana)
