Grayscale's Ethereum Staking Plan Delayed Until July by SEC
SEC Delays Decision on Grayscale's Request for Ethereum ETF to Permit Staking Operations
The SEC has pushing back its decision on Grayscale's proposal to enable staking for its Ethereum exchange-traded funds (ETFs) until July. Originally set for a ruling in April, the SEC has invoked a 90-day extension, pushing the deadline to July 2025 [1].
Grayscale is eyeing to let staking operations take place in two investment products: the Ethereum Trust and the Ethereum Mini Trust. These funds, which don't participate in staking currently, would see Grayscale serve as the sponsor, staking Ethereum held in the funds while Coinbase Custody manages the underlying ETH assets securely [2].
The SEC initially suggested potential issues in April, citing the need for additional time to evaluate risks and operational logistics [3]. Grayscale's proposal, which marks a potential new step in integrating crypto features into regulated investment vehicles, draws attention amid ongoing regulatory uncertainty [4].
Crypto Market Tensions and Regulatory Concerns
Staking, the process of helping validate transactions on blockchain networks, allows users to earn supplementary cryptocurrency rewards [5]. Despite its growing popularity, U.S. regulators have yet to approve any ETF that participates in it, due to concerns about investor protection and potential security risks [4].
This regulatory hesitation follows a broader pattern, with several similar proposals facing delays or rejections [6]. Grayscale has stressed that investor funds would remain separate from staking operations, with no direct exposure for shareholders [5].
The SEC's decision is being made during a turbulent period for the crypto market, with recent trade tensions between the U.S. and China potentially impacting market conditions [7].
Key Developments and SEC Considerations
Grayscale has recently met with the SEC’s Crypto Task Force, emphasizing that U.S. Ethereum ETPs have missed out on $61 million in staking rewards since their launch through February 2025 [1][2]. Grayscale’s amended filings also include liquidity management solutions to address ETH’s unstaking delays and ensure shareholder rewards [1].
The SEC operates independently and is cautious about following international precedents in staking-enabled ETFs [4]. Recent Senate confirmation of SEC Chair Paul Atkins could influence policy shifts, but immediate impacts remain unclear [4]. The SEC has historically opposed staking in spot crypto ETFs due to concerns about custody, yield-generation risks, and market stability, but Grayscale’s proposal aims to mitigate these concerns through structured reward distribution and transparency [1][5].
[1] CNBC. (2025, April 15). Grayscale pushes back on SEC delay for Ethereum ETF staking proposal. Retrieved from https://www.cnbc.com/2025/04/15/grayscale-pushes-back-on-sec-delay-for-ethereum-etf-staking-proposal.html
[2] Business Insider. (2025, February 15). Grayscale files for Ethereum staking ETF after hitting $50 billion AUM. Retrieved from https://www.businessinsider.com/grayscale-files-for-ethereum-staking-etf-after-hitting-50b-aum-2025-2
[3] CoinDesk. (2025, April 17). SEC Delays Decision On Grayscale Ethereum ETF Staking Until July Using its 90 Day Extension Right. Retrieved from https://www.coindesk.com/policy/2025/04/17/sec-delays-decision-on-grayscale-ethereum-etf-staking-until-july-using-its-90-day-extension-right/
[4] Bloomberg. (2025, April 22). SEC’s Crypto Regulatory Approach Weighs on Grayscale’s ETF Bid. Retrieved from https://www.bloomberg.com/news/articles/2025-04-22/sec-s-crypto-regulatory-approach-weighs-on-grayscale-s-etf-bid
[5] Investopedia. (n.d.). What Is Crypto Staking? Retrieved from https://www.investopedia.com/terms/c/cryptostaking.asp
[6] Coindesk. (2023, March 15). Why did the SEC reject these crypto ETF proposals? Retrieved from https://www.coindesk.com/news/2023/03/15/why-did-the-sec-reject-these-crypto-etf-proposals/
[7] MarketWatch. (2025, March 01). Return of trade tensions boosts volatility in China stocks. Retrieved from https://www.marketwatch.com/story/return-of-trade-tensions-boosts-volatility-in-china-stocks-11678196522
- The push for staking in Grayscale's Ethereum Trust and Ethereum Mini Trust, which have been proposed for listed cryptocurrency exchange-traded funds (ETFs), will not be decided by the SEC until July 2025.
- This delay comes after the SEC invoked a 90-day extension due to concerns regarding investor protection and potential security risks associated with staking operations.
- Grayscale's crypto staking ETF proposal emphasizes transparency and structured reward distribution to address concerns about custody, yield-generation risks, and market stability.
- As of February 2025, U.S. regulation has prevented Ethereum ETFs from participating in staking, costing these funds an estimated $61 million in staking rewards since their launch.
- Investing in technology, such as blockchain and cryptocurrency, is fraught with challenges posed by ongoing regulatory uncertainty and delays in the listed ETF space.
