Staking In Ethereum ETFs: Will Issuers Eventually Add the Feature?
Spot Ethereum ETFs began trading in the U.S. on July 23. The funds saw early success with volumes above $1 billion on the first day of trading.
The ETFs notably lack support for staking, a feature that would allow issuers to lock up ETH and earn rewards or interest. Each fund would treat interest as income.
Prior to launch, several Ethereum ETF applicants proposed staking participation but ultimately removed the proposal, seemingly to meet the U.S. Securities and Exchange Commission (SEC)’s requirements and strengthen odds of approval.
New Comments on Staking
Despite a lack of initial support, new reports indicate that spot Ethereum ETFs could add staking in the future. SEC Commissioner Hester Pierce said on July 17 that staking and other features are “always open for reconsideration” in her view.
Some ETF issuers have also expressed optimism around the addition of staking. Cynthia Lo Bessette, head of digital asset management at Fidelity, told Coindesk that she hopes the industry can “educate and provide perspective” on adding staking opportunities for those who invest in the spot Ethereum ETFs.
Meanwhile, a Franklin Templeton executive told Coindesk that regulatory clarity will determine whether the various funds introduce staking features. Another said that removing staking was the easiest method of obtaining approval.
ETF Store President Nate Geraci told Coindesk that he is confident that staking will eventually arrive in spot ETH ETFs, calling the issue “a matter of when, not if.” Geraci argued that a Trump presidency could speed up the process. Otherwise, applicants might need to wait for a full crypto regulatory framework before adding staking.
Not all comments were so optimistic. Rob Mitchnick, head of digital assets for BlackRock, told Coindesk that the firm is “not in an active discussion” on the matter and said the SEC has made its position clear.
Existing Staking Options
Some non-U.S. investments already utilize staking. In Canada, the Purpose Ether Staking Corp. ETF (ETHC.B) and the 3iQ Ether Staking ETF (ETHQ) engage in staking. In Europe, the 21Shares Ethereum Staking ETP Fund (AETH), the VanEck Ethereum ETN (VETH), and the CoinShares Physical Staked Ethereum ETP (ETHE) utilize staking.
It should be noted that ETFs engaged in staking may benefit by doing so. However, only the issuer directly participates in staking in this approach.
Retail crypto investors who want to stake ETH on their own terms can do so through exchanges and staking pools. Large Ethereum investors with at least 32 ETH can stake independently as a validator node operator.
