Grayscale seeks SEC approval to allow Ethereum staking within its United States based ETPs.
U.S. Ethereum investors lost potential rewards worth sixty one million dollars due to staking restrictions.
The SEC delayed the decision on Ethereum staking proposals until June first after leadership changes.
Representatives from Grayscale Investments met with the SEC’s Crypto Task Force on April 21 in Washington, D.C. They advocated for changes to staking regulations tied to Ethereum exchange-traded products (ETPs).
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The meeting focused on Grayscale’s request to amend its Form 19b-4 filings for two major products. These are the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH).
Grayscale Highlights Missed Rewards for U.S. Investors
Grayscale outlined that U.S. Ethereum ETPs, which manage over $8 billion, cannot currently stake their holdings. The company noted that these restrictions have cost investors approximately $61 million in unrealized staking rewards through February 2025.
They emphasized that non-U.S. ETPs and other stakers have collected rewards that U.S. investors missed. This financial gap, they argued, weakens the competitiveness of U.S.-based Ethereum investment products.
Benefits of Staking for Ethereum and Investors
Grayscale emphasized that investors gain financial advantages from staking which simultaneously strengthens the Ethereum operational network. ETH rewards for shareholders stem from their participation in blockchain validation and security through staking activities.
They introduced a detailed plan to manage liquidity challenges. This included a "Liquidity Sleeve," access to short-term financing, and a revolving credit facility. These measures aim to ensure smooth redemptions even during unstaking periods.
Global Markets Already Embracing Staking in ETPs
Grayscale pointed to successful staking integrations in Canada, Europe, and Hong Kong. They argued that these examples show staking can be added without harming trading efficiency or liquidity.
They proposed using a secure, controlled staking method where asset managers maintain full custody of the staked Ethereum. This model, they said, would reduce risks associated with traditional staking methods and align with investor protection standards.
Regulatory Shifts and SEC Decision Delay
The SEC postponed its decision on Grayscale’s staking proposal from April 17 to June 1, 2025. This delay follows the appointment of Paul Atkins as the new SEC Chair. Atkins, a former commissioner, is known for a more crypto-friendly regulatory stance.
Grayscale hopes the regulatory shift will favor their proposal. They argue that modernizing rules will better reflect the current maturity of the Ethereum ETP market.
They also acknowledged possible tax complications and slashing risks associated with staking. The organization believes they can handle identified risks by implementing robust operational protections as well as working with Coinbase Custody.
The SEC's ultimate ruling about crypto investment products will define their future market acceptability in the United States. Approval could open the door for a range of staking-enabled offerings.
