Grayscale Ethereum And Solana ETFs Plan Staking Cash Payouts

Quarterly Cash Distributions Set for August

Grayscale is moving to convert staking rewards from its Ethereum ($ETH) and Solana ($SOL) exchange-traded funds into regular cash payouts for shareholders. The asset manager filed a prospectus supplement on July 17, 2026, outlining changes to its Grayscale Solana Staking ETF (ticker: GSOL) that introduce mandatory quarterly cash distributions of staking rewards, with the amendment expected to take effect on or around August 7, 2026. A parallel amendment has been filed for its Ethereum Staking ETF (ticker: ETHE) on the same timeline.

Under the proposed structure, both trusts would convert staking rewards to cash no less often than quarterly, with the net proceeds distributed to shareholders after expenses and a facilitation payment to the sponsor. SEC documents explicitly state that there is no guarantee of a fixed distribution amount, as payouts will depend on the actual staking rewards received during each period.

IRS Guidance and the Case for Standardised Payouts

Grayscale views the change as necessary to align with IRS Revenue Procedure 2025-31, so each trust can continue to be treated as a grantor trust for U.S. federal income tax purposes. That procedure allows a compliant trust to distribute net staking rewards consistently, either in kind or after a cash sale, no less frequently than quarterly. Grayscale's proposed agreements specifically choose cash, requiring the trusts to sell the native-asset rewards before passing net proceeds to shareholders.

The move also has a practical benefit for investors. By aligning both the ETHE and GSOL trusts to the same payout cadence, investors gain a common framework to compare net cash returned across the two funds. GSOL stakes all of its Solana holdings, generating approximately 6.1% in annual rewards, which are converted to cash and paid out after fees. By contrast, gross staking rewards on Ethereum currently range from 3.1% to 3.3% annually, with net distributions to shareholders coming in at around 1.9% to 2.6% after fund fees and custody costs.

The Ethereum fund has already tested this model. In January 2026, Grayscale's ETHE became the first spot crypto ETP in the U.S. to distribute staking rewards to shareholders, paying out proceeds from rewards earned between October 6, 2025 and December 31, 2025. That initial distribution totalled $9.4 million, paid on January 6, 2026.

Investors should note the tax implications. Grayscale explicitly flags in the filing that cash distributions carry tax consequences, and the fund encourages investors to consult tax advisors, as distributions from a staking ETF are likely treated as ordinary income in most jurisdictions.

Sources:
Grayscale Ethereum Staking ETF, SEC Form 424B3 Filing, July 17, 2026
Grayscale Solana Staking ETF, SEC Form 424B3 Filing, July 17, 2026
CryptoSlate: Grayscale quarterly cash distributions analysis, July 19, 2026