The New York Stock Exchange has put forth a proposal to the U.S. Securities and Exchange Commission aimed at permitting staking for the Bitwise Ethereum exchange-traded funds.
A filing made on March 20 with the SEC outlines the proposal, which seeks regulatory consent to incorporate staking into the ETF’s framework. If granted approval, the fund would be able to utilize a method referred to as “point-and-click” staking to stake a portion of its Ethereum (ETH) while retaining control over the assets. This strategy mitigates security risks by ensuring that the staked ETH remains in the wallet.
Ethereum ETFs were launched in July 2024, but they have not attracted interest comparable to Bitcoin (BTC) ETFs. Data shows that as of March 20, Ethereum ETFs held $6.79 billion in total net assets, experiencing $84 million in cumulative outflows in the preceding week. In contrast, spot Bitcoin ETFs have amassed $94.47 billion in assets.
At the Digital Asset Summit on March 20, the head of digital assets at a major financial institution remarked that Ethereum ETFs are less appealing due to the lack of staking rewards. He emphasized that staking is a crucial aspect of Ethereum and an important avenue for investor returns. According to him, allowing staking could represent a significant shift for Ethereum ETFs, potentially drawing in a greater number of investors.
Staking emerged with Ethereum’s transition to proof-of-stake in 2022, enabling ETH holders to lock up their tokens in exchange for rewards. Offering annual yields ranging from 2% to 7%, it presents a noteworthy investment opportunity. Currently, staking deposits have exceeded 33 million ETH, representing 27% of the total ETH supply in circulation, according to available data.
Beyond ETFs, staking could also bolster Ethereum’s market performance. ETH has seen a 47% decline from its December peak of $4,105 to $1,990, marking it as one of the poorer-performing major cryptocurrencies. The approval of staking for ETFs could lead to increased demand for ETH as institutional investors make their way into the market.