Summary:
Grayscale, a leading crypto-focused asset manager, staked $150 million worth of Ether (ETH) for its exchange-traded products (ETPs), marking a significant milestone in the integration of staking-based passive income into traditional investment vehicles. This move positions Grayscale as the first US-based crypto fund issuer to offer staking rewards for its ETPs, enabling shareholders to earn passive income. The staking rewards will be treated as fund assets, with shareholders receiving up to 94% of the earnings after fees. Industry experts await regulatory approval for similar staking-based ETPs, with October poised as a pivotal month for crypto fund decisions by the SEC.
What This Means for You:
- Earn Passive Income: Grayscale’s ETPs allow you to earn staking rewards, with up to 94% of earnings going to shareholders after fees.
- Increased Accessibility: This move makes staking rewards accessible to traditional investors through regulated financial products.
- Regulatory Watch: Stay informed about upcoming SEC decisions on other staking ETPs, which could expand opportunities in the crypto market.
- Future Outlook: The increasing interest in staking ETPs signals a broader trend toward integrating crypto into mainstream finance, but regulatory delays due to government shutdowns may impact timelines.
Grayscale Stakes $150M ETH, Industry Awaits Staking ETP Approval:
Crypto-focused asset manager Grayscale staked $150 million worth of Ether after introducing staking for its exchange-traded products (ETPs) on Monday.
The asset management company staked 32,000 Ether (ETH) worth $150 million, according to blockchain data platform Lookonchain.
The transfer occurred a day after Grayscale introduced staking for its Ether ETPs, making it the first US-based crypto fund issuer to offer staking-based passive income for its funds.
The move enables Grayscale’s ETP and its shareholders to start earning passive income via staking rewards on the $150 million. These staking rewards will be treated as “assets of the fund,” according to Grayscale’s ETP Staking Policy.
Deducting sponsor and custodian fees, the fund’s shareholders will earn up to 77% of the total generated staking rewards with Grayscale’s Ethereum Trust and about 94% with the Ethereum Mini Trust, based on the fee structures disclosed in the SEC filings.
Both Grayscale Ethereum Trust ETF (ETHE) and Grayscale Ethereum Mini Trust ETF (ETH) are exchange-traded products registered under the Securities Act of 1933, not the Investment Company Act of 1940, the latter being the regulatory framework used for traditional mutual funds.
This makes ETPs structurally different from ETFs governed by the 1940 Act.
At least two additional Ether staking-enabled funds are expected to receive a response from the US Securities and Exchange Commission (SEC) in October.
Related: Korean retail capital driving Ether price, treasury demand: Samson Mow
SEC Faces Deadlines on 16 Altcoin ETPs in October
October is shaping up as a promising month for crypto, with 16 crypto ETP applications on the SEC’s calendar for the month.
Of the 16, at least two crypto staking funds are awaiting a decision during the month, including the 21Shares’ Core Ethereum ETF (TETH) staking filing scheduled for Oct. 23 and BlackRock’s iShares Ethereum Trust (ETHA) ETP amendment seeking to add staking rewards expected on Oct. 30.
21Shares’ Ether fund is registered under the Securities Act of 1933, which makes it an ETP, akin to Grayscale’s ETH and ETHE ETPs.
Related: Aging boomers and global wealth seen boosting crypto until 2100
Meanwhile, the REX-Osprey Solana Staking ETF launched in July, as the first Solana (SOL) staking ETF under the Investment Company Act of 1940, which allows crypto ETFs to hold the majority of their spot assets directly and distribute staking rewards where applicable.
Grayscale’s Solana fund, the Grayscale Solana Trust (GSOL), has also enabled staking and is awaiting regulatory approval for uplisting to an ETP.
However, the ongoing government shutdown may slow down the regulatory response to crypto ETP applications, as the SEC said that it would operate “under modified conditions” with an “extremely limited number of staff” until a funding bill is passed.
With no clear resolution in sight, the Senate is set to reconvene on the funding bill later on Tuesday, after Republicans and Democrats failed to agree for the fifth time on Monday.
The government shutdown has also increased investor appetite for cryptocurrency funds and decentralized assets, driven by growing uncertainty.
Crypto ETPs saw their highest-ever inflows last week after the government shutdown, recording $5.95 billion worth of cumulative investments, Cointelegraph reported on Monday.
Magazine: Altcoin season 2025 is almost here… but the rules have changed
Extra Information:
For further reading on Ethereum staking and its implications, check out Ethereum Staking Guide. Learn more about the regulatory landscape for crypto funds at the SEC’s official website. For insights into how staking works, visit Coinbase’s Staking Guide.
People Also Ask About:
- What is Ethereum staking? Ethereum staking involves locking up ETH to support the network and earn rewards.
- How does Grayscale’s staking ETP work? Grayscale stakes ETH on behalf of its ETP shareholders, distributing rewards after fees.
- What are the risks of staking? Risks include slashing penalties, market volatility, and regulatory changes.
- When will other staking ETPs be approved? Decisions on other staking ETPs are expected in October, pending SEC approval.
- How are staking rewards taxed? Staking rewards are typically treated as taxable income in many jurisdictions.
Expert Opinion:
Grayscale’s pioneering move into staking ETPs signifies a major step toward mainstream adoption of crypto-based financial products. As regulatory frameworks evolve, staking ETPs could become a key driver of institutional investment in blockchain technology, offering new avenues for passive income and portfolio diversification.
Key Terms:
- Ethereum staking rewards
- Crypto exchange-traded products (ETPs)
- Grayscale Ethereum Trust
- SEC crypto regulations
- Passive income through staking
- Blockchain-based investment vehicles
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