Ethereum ETFs Could Soon Offer Staking Rewards: Details

The Cboe BZX Exchange has filed a rule change request with the U.S. Securities and Exchange Commission (SEC) to allow staking for the 21Shares Core Ethereum ETF. This move could mark a historic shift in the U.S. market, as it would be the first ETF in the country to incorporate staking rewards for Ethereum.

Previous Ethereum ETF approvals excluded staking due to SEC concerns about whether staking activities could classify as securities.

The recent 19b-4 filing by Cboe BZX Exchange aims to change that. If approved, it could pave the way for more crypto ETFs to integrate staking, offering passive income opportunities for investors.

Staking allows Ethereum holders to earn rewards by locking up their tokens to support the network’s security. By enabling staking within an ETF, investors could receive additional returns on their holdings without needing to stake ETH themselves.

Bloomberg Intelligence analyst James Seyffart highlighted that this is the first ETF filing in the U.S. to propose staking for ETH holdings. 

Regulatory Shift Underway?

The SEC has historically taken a strict stance on staking, with former Chairman Gary Gensler suggesting that proof-of-stake tokens resemble securities. However, with a new administration and changing regulatory perspectives, many industry experts believe staking approvals could become a reality by 2025.

SEC Commissioner Hester Peirce recently expressed optimism about upcoming regulatory shifts under new leadership. She has advocated for revisiting past SEC decisions on crypto ETFs, including staking and in-kind redemptions.

Additionally, ETF-based staking could lead to:

• Higher demand for Ethereum as institutions seek yield-generating assets.

• Reduced selling pressure since staked ETH remains locked for security purposes.

• Increased mainstream adoption as regulated staking products enter the market.

The SEC will review the rule change request before making a decision. If the SEC approves this rule change, it could trigger a wave of similar filings from other ETF providers like BlackRock and Fidelity. This would strengthen Ethereum’s position in traditional finance, making it more attractive to institutional investors.