Spot Ether ETFs to Avoid Staking ETH Ahead of SEC Decision

Issuers of proposed spot Ether ETFs in the United States have made it clear to the SEC that they will not engage in staking the Ether ($ETH) held by the funds. This decision comes ahead of the SEC’s expected ruling on the applications by May 23, 2024. Staking Ether is a process that involves depositing $ETH to help secure the Ethereum blockchain, in exchange for potential yield. However, applicants for Ether ETFs have stated that no part of the fund’s ETH will be used for proof-of-stake validation or to generate additional income.
CBOE, one of the exchanges expected to list the ETFs, emphasized that neither the trust, its sponsor, custodian, nor any associated party would directly or indirectly engage in staking activities with the trust’s ETH. Ether ETFs aim to offer investors a way to gain exposure to Ethereum, the second-largest cryptocurrency by market capitalization, without directly purchasing or storing ETH. This development follows recent applications by several financial firms, including Blackrock, Grayscale, Ark Invest/21Shares, Fidelity, Vaneck, Hashdex, Franklin Templeton, Invesco/Galaxy Digital, and Bitwise, signaling a growing interest in cryptocurrency-based investment products.
The SEC’s decision on these applications, which have been submitted starting from 2021 through early 2024, is highly anticipated. Approval of such ETFs could significantly impact the cryptocurrency market, providing a regulated and potentially safer investment vehicle for exposure to digital currencies.