Grayscale Investments announced that it has enabled staking for its two spot Ethereum ETFs: the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH).
This marks a significant milestone, making these the first U.S.-listed spot cryptocurrency exchange-traded products (ETPs) to offer staking rewards to investors. ETHE: Provides spot Ether (ETH) exposure; manages approximately $4.82 billion in assets.
ETH: A “mini” version offering similar ETH exposure with lower fees; manages about $3.31 billion in assets. Grayscale will stake a portion of the funds’ ETH holdings passively through institutional custodians and a diversified network of validator providers.
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This allows investors to earn network rewards (yields) while maintaining exposure to ETH price movements, without needing to directly hold or manage the assets. Rewards accrue to the funds and are reflected in their net asset value (NAV), benefiting shareholders indirectly.
These ETFs operate under the Securities Act of 1933 (not the Investment Company Act of 1940), similar to spot Bitcoin and ETH ETFs approved earlier. The move follows a proposal filed earlier in 2025 by the New York Stock Exchange (NYSE) on Grayscale’s behalf to the SEC for staking in Ethereum ETFs.
No additional SEC approval was required for this activation, as it aligns with existing structures. Grayscale also enabled staking for its Grayscale Solana Trust (GSOL), which holds spot Solana (SOL) and is pending SEC approval to uplist as an ETF—potentially making it one of the first spot Solana ETPs with staking.
CEO Peter Mintzberg described this as “first-mover innovation,” positioning Grayscale to capture institutional capital by unlocking yield-driven participation in proof-of-stake networks like Ethereum. Analysts, such as Markus Thielen from 10x Research, predict this could drive significant new inflows into Ethereum, with spot crypto ETFs already seeing record $5.95 billion in weekly inflows.
Staking is a core mechanism in Ethereum’s proof-of-stake consensus, where participants lock up ETH to validate transactions and secure the network in exchange for rewards typically 3-5% APY, depending on network conditions. Prior to this, U.S. investors in spot ETH ETFs couldn’t access these yields directly.
This update bridges traditional finance with blockchain economics, potentially boosting ETH’s attractiveness amid rising institutional adoption. However, investments in these ETFs carry risks, including volatility, slashing penalties for validators, and no direct ownership of the underlying ETH.
Staking allows investors to earn passive income typically 3-5% APY from Ethereum’s proof-of-stake rewards, in addition to potential price appreciation of ETH. This makes these ETFs more attractive compared to non-staking crypto ETPs or traditional assets with lower yields.
By offering staking rewards, Grayscale’s ETFs may draw more capital from investors seeking both exposure to ETH’s price and additional returns, especially in a low-yield environment for traditional assets.
Staking in a regulated ETF structure provides a familiar, accessible vehicle for institutional investors (e.g., pension funds, wealth managers) to participate in Ethereum’s blockchain economics without managing private keys or validators.
The ability to stake could drive significant inflows into Ethereum ETFs, as seen with the reported $5.95 billion in weekly inflows for spot crypto ETFs. This could further legitimize Ethereum as an institutional-grade asset.
Increased demand for ETH through ETF investments may provide upward pressure on ETH’s price, especially if staking reduces liquid supply as staked ETH is locked. More ETH staked via institutional custodians strengthens Ethereum’s proof-of-stake network, enhancing its security and decentralization, as Grayscale uses a diversified validator network.
Staking rewards could make ETH more appealing compared to other cryptocurrencies like Bitcoin, which lacks staking, potentially shifting capital allocation. The fact that no additional SEC approval was needed suggests staking is viewed as compatible with existing ETF frameworks under the Securities Act of 1933.
This could pave the way for other issuers like BlackRock, Fidelity to enable staking in their ETH ETFs. Grayscale’s move, including its Solana Trust (GSOL), sets a precedent for staking in other proof-of-stake cryptocurrencies if they gain spot ETF approval, expanding the scope of crypto ETPs.
While staking offers rewards, ETH’s price volatility and potential slashing penalties for validator errors introduce risks that could affect ETF NAV and investor returns. Investors in these ETFs don’t directly control staked ETH or rewards, which may deter those preferring self-custody or direct staking for higher control and potentially higher yields.
Staking rewards may be treated as income by the IRS, complicating tax reporting for ETF investors compared to direct crypto holders. Grayscale’s first-mover advantage in staking could pressure competitors to add similar features to their ETH ETFs or risk losing market share. This may accelerate innovation in the crypto ETF space.
Staking in ETFs normalizes blockchain-native features for traditional investors, potentially increasing public awareness and acceptance of crypto as a legitimate asset class. Success here could encourage issuers to push for ETFs tied to other staking-enabled cryptocurrencies, expanding the range of crypto investment products.
Grayscale’s introduction of staking for its Ethereum ETFs is a game-changer, blending traditional finance with blockchain rewards to attract both retail and institutional investors. It could drive significant capital into Ethereum, enhance its network, and set a precedent for other crypto ETPs.
However, risks like volatility, regulatory scrutiny, and indirect ownership may temper enthusiasm for some investors. This move positions Grayscale as a leader in crypto ETF innovation and could reshape the competitive landscape for digital assets in the U.S.