SEC Extends Review of Grayscale’s Staked Ether ETF, Sparking Debate Over Future of Staking in the US
The US Securities and Exchange Commission (SEC) has continued to delay its decision on a proposed rule change that could pave the way for staking to be added to ether ETFs. The move marks a setback for hopes of seeing new financial products that combine staking returns with traditional investments in digital assets.
In an official announcement on April 14, the SEC said it would extend its review of NYSE Arca’s request to allow staking in its Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF. NYSE Arca filed the application on February 14, but has yet to receive any public comments. The SEC will have until June 1, 2025, to decide whether to approve, reject, or continue its review of the proposal.
The SEC said the extension is “necessary to allow sufficient time to fully consider the issues related to the proposed rule change,” citing Section 19(b)(2) of the Securities Exchange Act of 1934, which allows the agency to extend its decision-making period to ensure a comprehensive review.
If approved, it would be the first time that ether ETFs would be allowed to incorporate staking functionality, allowing holders to earn additional rewards for their part in securing the Ethereum network. However, the proposal also raises legal and technical debates, particularly around the classification of staking rewards, the slashing mechanism for violations, and the liquidity of staking withdrawals.
The SEC has previously expressed caution about staking in a centralized financial environment. In 2023, the agency fined exchange Kraken $30 million for offering staking services that were deemed unregistered securities. Coinbase faced similar charges, but the case was later dismissed without penalty. However, the SEC has recently taken a more open stance toward decentralized staking, arguing that it does not necessarily violate federal securities laws.
The delay in deciding on an ether staking ETF not only adds to investor uncertainty, but also raises major questions about the SEC’s long-term strategy for financial products tied to cryptocurrencies. With the new deadline extended to June, the market will continue to closely monitor developments from the SEC, which is playing a central role in shaping the future of Web3 investing in the United States.