Grayscale urges SEC to approve Ethereum ETF staking to unlock $61M

Grayscale Investments is pressing the U.S. Securities and Exchange Commission (SEC) to approve staking for its Ethereum (CRYPTO:ETH) exchange-traded products (ETPs), highlighting that U.S. funds have foregone approximately $61 million in rewards since launch through February 2025.

On April 21, Grayscale representatives met with the SEC’s Crypto Task Force in Washington D.C. to advocate amending filings for the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH) to permit staking activities.

“We appreciate the opportunity to engage with the Securities and Exchange Commission’s Crypto Task Force,” Craig Salm, Grayscale’s chief legal officer, expressed.

Grayscale’s memorandum emphasised that U.S. Ethereum ETPs manage $8.1 billion in assets but currently cannot stake their holdings, unlike non-U.S. counterparts that earn staking rewards.

The firm argued that staking participation would enhance Ethereum’s network security and provide additional returns to shareholders.

“BTC is setting up for another break of all-time highs if the capital flow trend continues,” he added.

To address liquidity and redemption risks during unstaking periods, Grayscale proposed a multi-layered liquidity strategy including a “Liquidity Sleeve,” short-term financing with custodians and liquidity providers, and a revolving credit facility.

The filing noted that spot ETH ETPs currently do not fully represent the underlying ETH because staking is disallowed, while European and Canadian markets have successfully integrated staking without harming trading efficiency.

Grayscale acknowledged potential tax implications and slashing risks but expressed confidence that operational safeguards and custody arrangements, notably with Coinbase Custody, would mitigate these issues.

The company urged the SEC to update regulations to reflect the Ethereum ETP market’s maturity and unlock the benefits of staking for U.S. investors.

At the time of reporting, the Ethereum price was $1,772.55.