On April 14, 2025, the U.S. Securities and Exchange Commission (SEC) postponed its decision regarding the proposal to allow Grayscale's spot Ethereum ETFs to participate in staking on the Ethereum network. This decision, pushed to June 1, takes place against the backdrop of significant volatility in the cryptocurrency market and escalating U.S.-China trade tensions. Will this move open the door for Ethereum ETF staking, or is it just a temporary setback? Let's analyze in detail.
SEC Delays Approval of Staking for Grayscale Ethereum ETF
In an announcement on April 14, 2025, the SEC stated that it would extend the review period for the proposed rule change from NYSE Arca, which filed on February 14, 2025, to seek approval for Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF to participate in staking on Ethereum's proof-of-stake system. The new deadline is set for June 1, 2025, when the SEC will decide to approve, deny, or open a hearing on the matter.
Staking is the process of committing cryptocurrency (such as ETH) to a network, like Ethereum, to support transaction validation and enhance network security. Participants staking on Ethereum receive rewards in ETH tokens for 'lending' their assets to the network. However, the SEC once evaluated the staking proposal as risky when approving a series of spot Ethereum ETFs in 2024, due to concerns about transparency and security in the staking process.
Market Context: Ethereum Decreases by 15%, Crypto Market Plummets
The SEC's decision to postpone was made amid significant pressure on the cryptocurrency market. According to data from CoinGecko, total crypto market capitalization fell by 3% last month, with prices plummeting by 15%, down to $1,640. This decline largely stems from global economic instability, particularly the trade tensions between Washington and Beijing. President Donald Trump imposed a 125% tariff on Chinese goods, affecting investor sentiment and leading to volatility in the digital asset market.
At the same time, the market witnessed record outflows from crypto funds, with $795 million flowing out last week, including $751 million from Bitcoin ETFs and $38 million from Ethereum funds, according to CoinShares. This indicates that institutional investors remain cautious, even as retail investors are inclined to 'buy the dip' as Bitcoin prices rebound to $85,000.
Staking Prospects: Positive Signs from the SEC
Despite the delay in decision-making, the SEC under President Trump is showing a friendlier attitude towards cryptocurrency. Last week, the SEC appointed Paul Atkins – a chairperson with a pro-digital asset stance – and dropped several lawsuits against major crypto companies like Coinbase, Ripple Labs, and Kraken. Additionally, the SEC approved options trading on April 1, 2025, a positive signal indicating that the agency might soon approve NYSE Arca's staking proposal.
Bloomberg ETF analyst James Seyffart expressed optimism, predicting that the SEC could approve staking for spot Ethereum ETFs before the end of 2025. In a social media post on April 9, 2025, Seyffart wrote: 'Many are asking me about the timing for staking approval for Ethereum ETFs. It is likely they will be approved soon, but the final deadline is the end of October.' Although Seyffart's deadline has been extended by the SEC to June 2025, his optimism still indicates positive potential for Ethereum ETF staking.
Impact on the Ethereum Market and Grayscale
Allowing staking could be a turning point for Grayscale and the Ethereum market. Staking not only provides rewards to investors (in the form of ETH) but also increases the attractiveness of spot Ethereum ETFs, attracting additional capital flows from both retail and institutional investors. Currently, Ethereum funds have only attracted $241 million since the beginning of 2025, a sharp decline from $44 billion in 2024, partly due to the lack of features like staking to boost yields.
If the SEC approves staking, the Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF could become top choices for investors looking to access Ethereum without directly managing wallets or participating in staking. This could also boost Ethereum's price recovery from $1,640, especially if market sentiment improves after tariff fluctuations.
The Future of Staking and the Crypto Market
The SEC's decision to postpone is not necessarily a negative signal, but rather a cautious step to ensure safety and transparency for staking within the ETF framework. With positive changes in SEC policy and crypto-friendly moves in the U.S. (such as the Bitcoin reserve bill in Florida), the cryptocurrency market can expect a more favorable legal environment in the future.
Furthermore, if staking is approved, Ethereum ETFs could pave the way for other financial products to integrate this feature, thereby promoting wider acceptance of Ethereum and other proof-of-stake blockchains. This could also encourage other countries, such as South Korea (with over 16 million crypto users), to consider integrating staking into their legal frameworks.
Conclusion: Can Staking Help Ethereum Weather the Storm?
The SEC's decision to postpone staking for Grayscale Ethereum ETF until June 1, 2025, occurs amid a sharp decline in the crypto market, with Ethereum dropping 15% to $1,640. However, the SEC's friendlier stance under Trump and optimistic predictions from experts like James Seyffart bring hope that staking may soon be approved. If successful, this would be a significant boost for Grayscale and Ethereum, helping the crypto market navigate the current challenging phase. Investors need to be patient and closely monitor developments from the SEC in the coming months.
Risk Warning: Crypto investments carry high risks due to price volatility and legal uncertainties. Please consider carefully before participating.