SEC Considers Ethereum ETF Staking Proposals

Ethereum ETF Staking: The Latest Push

This month, the SEC acknowledged key filings related to Ethereum ETF staking. On February 12, 2025, Cboe filed to amend 21Shares’ spot ETH ETF to allow it to stake its Ethereum holdings. This filing was recognized by the SEC on February 19. Similarly, on February 14, NYSE Arca filed to include staking in Grayscale’s Ethereum ETFs. Rumors suggest that Fidelity may also be involved, though this is not confirmed in public filings.

In May 2024, the SEC approved spot ETH ETFs but excluded staking due to security concerns. However, issuers now aim to leverage Ethereum’s proof-of-stake rewards, which offer an annual return of around 3-4%, to enhance yields. As of mid-February 2025, the total ETH holdings in these ETFs stand at approximately 2.5 million ETH, representing a value of $7-8 billion at current prices.

Staking and ETH Price Impact

Staking involves locking ETH to secure the Ethereum network, with participants earning rewards in return. For ETFs, this could draw in more investors, particularly following the February 21, 2025, Bybit hack, which lost $1.46 billion and exposed the risks associated with centralized exchanges. Ethereum ETF staking could also reduce supply—28% of ETH is already staked—which might drive up ETH’s price, currently hovering near $2,700, especially in light of Bitcoin’s dip below $90,000.

In February, market flows showed mixed results. Grayscale’s ETHE saw significant outflows, losing $39.2 million on August 2 (the largest outflow since then) and $10.33 million on February 20. Over time, the total outflows reached $3.99 billion. However, Ethereum ETFs experienced $12.58 million in inflows on February 11, indicating selective demand. If staking approval is granted, this could reverse the outflows, increase inflows, and potentially boost ETH’s value.

Crypto Staking Regulation Evolves

Historically, the SEC has been cautious about staking. In 2023, the agency sued Kraken over unregistered staking services. Last year, ETF approvals excluded staking in order to expedite the process. However, a new administration appears to be more open to crypto staking, as evidenced by the SEC’s review of the 21Shares and Grayscale filings and the invitation for public comments. This suggests a shift in crypto staking regulation could be on the horizon.

What’s Ahead for ETH ETFs?

While approval is not guaranteed, the SEC must still clear exchange rules (19b-4) and issuer filings (S-1), a process that could take several months. If successful, Ethereum ETF staking could attract billions more into the market. Current ETF inflows already total $2.73 billion, despite Grayscale’s influence. Higher yields from staking might spark a price rally, especially if staking leads to a reduction in Ethereum’s liquid supply.

Ethereum’s price is more sensitive to supply changes than Bitcoin’s due to a lower exchange-held supply (10.3% vs. Bitcoin’s 11.7%) and net-negative issuance since the Merge. Staking via ETFs could further amplify this effect, potentially driving ETH’s price higher.

Conclusion

The SEC’s review of Ethereum ETF staking filings marks a critical turning point for the cryptocurrency. With 2.5 million ETH already held in ETFs, staking could reshape demand dynamics and push Ethereum’s price higher. Investors and industry experts will be watching closely as the SEC moves forward with its evaluation in the coming months.