Grayscale is urging the SEC to approve staking for Ethereum ETF, unlock millions of rewards, strengthen Ethereum's network, and drive US crypto investment.
Grayscale urges the SEC to allow staking of Ethereum ETFs, citing profits from key investors
Representatives from Grayscale Investments were convened in Washington, DC, along with members of the U.S. Securities and Exchange Commission's Cryptographic Task Force on April 21 to advocate for changes in regulatory bets related to Ethereum Exchange-Traded Products (ETP).
In a memorandum summarizing the meeting, Grayscale details the request to amend the Form 19B-4 filing for the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH) and aims to allow staking activities. “We are pleased to announce that we are committed to providing a range of services and services to our customers,” said Craig Salm, Chief Legal Officer at Grayscale Investments.
The documents provided during the meeting outlined the Grayscale overview. This should be permitted to hold its holdings, just like its non-US counterparts, as US Ethereum ETPS collectively manages its $8.1 billion assets. Grayscale emphasized:
ETH ETP is on the 60th floor of approximately $61 million as it did not include compound daily rewards as it failed to participate in staking until February 2025 launch. Instead, such rewards have been sent to non-eth ETPs and other non-ETP stakers.
Crypto Asset Manager highlighted the benefits of staking and explained that participation enhances the security of the Ethereum network and provides additional returns to shareholders. “Through staking, US ETPs will participate in validating transactions on the Ethereum network, contributing to the security and efficiency of the Ethereum blockchain, earning ETH rewards in return,” the memorandum claimed.
Additionally, Grayscale has introduced a multi-layer liquidity strategy, including “liquidity sleeves,” short-term financing options with custodians and liquidity providers, and revolving credit facilities to mitigate reimbursement risks during the permanent period.
In its conclusion, Grayscale highlighted the need to update regulations to reflect the maturity of the Ethereum ETP market. The documentation explains:
Currently, Spot ETH ETP does not fully represent the underlying ETH. Because they are not currently permitted to engage in staking.
Furthermore, we noted that the non-US markets in Europe and Canada, in particular, had already succeeded in integrating staking into ETPs without compromising trading efficiency. Grayscale insisted: “The experience of using traditional financial analogues and managing ETPs facing similar liquidity challenges, coupled with Grayscale's connectivity and partnership across the digital asset ecosystem, allows us to effectively and responsibly wager ETH in ETPs.” As a broader consideration, the memo acknowledged the potential tax impact and reduction risks, but expressed confidence that they would manage their exposures through operational protection and custody, particularly Coinbase's custody.
