The U.S. Securities and Exchange Commission (SEC) is set to make a critical decision on Grayscale’s Ethereum Exchange-Traded Fund (ETF) staking proposal by May 26, 2025.
The proposal, filed by NYSE Arca on February 14, seeks approval for staking rewards in Grayscale’s Ethereum Trust ETF and the Grayscale Ethereum Mini Trust ETF. If approved, it would mark a significant shift in how cryptocurrency investments integrate staking into regulated financial products.
Grayscale’s plan would allow a portion of the Ethereum held in its ETFs to be staked through trusted providers while maintaining custody and regulatory compliance. Coinbase Custody would continue to hold the Ethereum assets, ensuring secure storage. The ETF sponsor would oversee staking without pooling funds with external entities, addressing concerns about decentralization and investor protection.
The SEC’s review process includes an initial 45-day period, which could be extended to 90 days. A public comment period is also underway, allowing industry voices to weigh in on the proposal. If approved, ETF investors would receive staking rewards while maintaining exposure to Ethereum’s price movements.
SEC’s Changing Stance on Staking
The SEC’s scrutiny of crypto staking has been historically rigid, treating many staking programs as unregistered securities offerings. In February 2023, the agency forced Kraken to shut down its staking services in the U.S. and pay a $30 million settlement. A similar lawsuit against Coinbase in June 2023 accused the company of offering unregistered securities through its staking services.
However, in a surprising turn, the SEC dismissed its lawsuit against Coinbase in February 2025, signaling a potential shift in regulatory strategy. Eleanor Terrett, a financial journalist, noted that the agency has shown an unusual level of interest in staking, actively seeking input from industry experts. This new openness contrasts with the SEC’s aggressive enforcement actions in previous years.
Precedents and Broader Implications
Grayscale’s staking proposal is not the first of its kind. Fidelity attempted a similar structure in March 2024, but regulatory uncertainty stalled its approval. Now, with the SEC actively engaging in discussions on staking, the landscape appears to be changing.
The agency’s decision on Grayscale’s proposal comes amid other regulatory shifts. The SEC recently accepted a staking proposal from 21Shares for its Core Ethereum ETF, suggesting a growing acceptance of staking in traditional financial products. The SEC also dropped investigations into Robinhood’s crypto division and Uniswap, further indicating a less adversarial stance toward the crypto industry.
Beyond Ethereum, Grayscale has also filed for a spot Cardano (ADA) ETF, which, if approved, would further expand institutional access to staking-enabled assets. This broader acceptance could pave the way for additional crypto ETFs incorporating staking rewards, potentially reshaping how digital assets are integrated into mainstream investment portfolios.
The SEC’s handling of this decision could set a major precedent for the future of staking in regulated financial markets. The agency’s stance on staking has been evolving, from strict enforcement to a more consultative approach. The formation of a Crypto Task Force in January 2025, led by Commissioner Hester Peirce, reflects an effort to develop clearer regulations while engaging with industry stakeholders.
Meanwhile, the SEC’s scaling back of its crypto enforcement unit in early 2025 suggests a shift away from aggressive crackdowns. Under the current administration, the agency appears to be adopting a more collaborative regulatory framework, emphasizing engagement rather than litigation.
