Are Ethereum Staking ETFs On The Way?

The Cboe BZX Exchange has submitted a proposal to the Securities and Exchange Commission to allow staking for the 21Shares Core Ethereum ETF.

What Happened: The request, filed through Form 19b-4, aims to modify the ETF's structure so that Ethereum ETH/USD held within the fund can participate in staking activities.

This move represents a significant development in the cryptocurrency investment space, as it would allow ETF investors to earn staking rewards, similar to how dividend-paying stocks generate passive income.

The filing states that these changes were made in collaboration with the ETF sponsor to enhance the fund's utility while maintaining its primary function as an Ethereum investment vehicle.

Bloomberg Intelligence ETF analyst James Seyffart noted that this appears to be the first ETF submission to the SEC that explicitly requests permission for staking.

“Assuming this is acknowledged by the SEC (I’d probably make that assumption right now but you never know),” Seyffart posted on X, highlighting the potential regulatory implications.

Previously, the SEC approved spot Ethereum ETFs from firms like 21Shares, BlackRock, and Fidelity.

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Why It Matters: Most issuers omitted staking provisions from their filings due to regulatory concerns. Under the leadership of former SEC Chair Gary Gensler, the agency had categorized proof-of-stake tokens as potential securities.

With the current administration expected to take a more open approach to cryptocurrency regulation, there is growing anticipation about how the SEC will handle staking-related proposals.

Speaking with Benzinga, Joe Z, co-founder of DeAgentAI, emphasized that the SEC's decision could set a precedent for future staking-enabled ETFs and impact institutional adoption of Ethereum.

“If approved, this move could legitimize Ethereum staking within traditional finance, attracting institutional investors by providing a regulated passive income opportunity comparable to dividend stocks or bonds,” he said.

“Additionally, it would help bridge the gap between decentralized finance and traditional finance, encouraging further integration of blockchain technology into mainstream investment products.”

Market participants are closely watching the SEC's response to this filing, as its approval could pave the way for broader adoption of staking mechanisms within regulated investment vehicles.

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