2024-03-20
Grayscale Investments is considering adding staking capabilities to its proposed Ethereum exchange-traded fund (ETF), as mentioned in the preliminary proxy statement filed on Tuesday.
This would allow investors to stake Ethereum through the trust, along with other proposed features like a creation and redemption process involving cash.
The Sponsor of the Trust believes that enabling the Trust to stake the Ethereum it holds in exchange for consideration would help mitigate inflationary pressures resulting from Ethereum's proof-of-stake protocol.
This move aims to preserve the value of the Trust Estate for ETHE's shareholders and ensure parity with other investment products offering similar staking opportunities, as stated in the preliminary proxy statement.
The trend of including a staking component in Ethereum ETF proposals is gaining momentum.
Fidelity, a financial giant, recently amended its spot Ethereum ETF application on Monday to incorporate provisions for staking the cryptocurrency, following similar moves by other firms competing for a spot in the Ethereum ETF market.
Grayscale has been actively pursuing the conversion of its Grayscale Ethereum Trust to a spot ether ETF, filing a Form 19b-4 alongside NYSE Arca in October.
Additionally, Grayscale previously sought to convert its Grayscale Bitcoin Trust to a spot bitcoin ETF, ultimately succeeding after a court victory and receiving approval from the SEC in January.
This indicates their ongoing efforts to navigate the regulatory landscape and offer crypto-based ETFs to investors.
Though the SEC approved spot bitcoin ETFs in January, the path to approval for an ether-backed product appears less certain.
Bloomberg ETF analyst James Seyffart said he expected regulators to turn down spot ether ETFs by May 23. He tweeted on Twitter (X)
The regulatory environment surrounding Ethereum ETFs may present more challenges or require additional scrutiny compared to Bitcoin ETFs.
