Morgan Stanley filed a registration statement (Form S-1) with the U.S. Securities and Exchange Commission (SEC) on January 7, 2026, for the Morgan Stanley Ethereum Trust, a proposed spot Ethereum (ETH) exchange-traded fund (ETF).
The trust aims to track the price of Ether (ETH) by directly holding the cryptocurrency, functioning as a passive investment vehicle. It includes a staking component: A portion of the fund’s ETH holdings will be staked through third-party providers to generate rewards, which will be reflected in the net asset value rather than distributed directly in some cases.
The filing follows similar S-1 submissions just a day earlier for spot Bitcoin (BTC) and Solana (SOL) trusts/ETFs, marking a rapid expansion of Morgan Stanley’s crypto product lineup. No ticker symbol, listing exchange, or custodian has been specified yet.
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This is Morgan Stanley’s first major push into issuing its own branded crypto ETFs, building on its recent moves to allow broader client access to crypto investments. This development signals deepening institutional adoption of cryptocurrencies, especially as spot ETH ETFs launched in 2024 continue to attract inflows.
Morgan Stanley Investment Management oversees significant assets reports vary between ~$1.8T and $9T total firm AUM, positioning it to potentially capture substantial demand from wealth management clients.
The product is pending SEC approval and not yet available for trading. ETH was trading around $3,200–$3,300 at the time of the news. Ethereum staking rewards are the incentives paid to participants who lock up (stake) their ETH to help secure the network under its Proof-of-Stake (PoS) consensus mechanism, introduced with The Merge in 2022.
By staking, you contribute to validating transactions and maintaining the blockchain’s integrity, earning newly issued ETH and a share of transaction fees in return. To run a full validator—the core unit for staking, you need 32 ETH.
Validators perform duties like: Voting on the validity of blocks most common and consistent reward source. Creating new blocks when selected includes priority fees from users and Maximal Extractable Value, or MEV. You can stake solo running your own node, through staking pools for smaller amounts, or services.
Rewards compound automatically: Excess balance over 32 ETH is periodically swept as payments, and the core stake grows with consensus rewards. Newly minted ETH for attestations, block proposals, and other duties. This is the base issuance, designed to incentivize participation.
Transaction priority fees (tips) and MEV captured when proposing a block via tools like MEV-Boost for higher yields. The total yield varies based on: Total ETH staked network-wide more staked ? lower per-validator yield, by design. Network activity (higher fees/MEV ? higher rewards). Validator performance uptime and correctness.
Staking yields have stabilized with 35-36 million ETH staked (29-30% of total supply). Recent estimates: Base network yield: ~2.5-3.5% APY including issuance and average fees/MEV. Coinbase: ~1.8-1.9%, Lido (stETH): ~2.5%, Rocket Pool (rETH): ~2.3%, Kraken: ~3.3%.
Overall reference rates from beaconcha.in or Compass Index: Around 2.9-3.5%. With optimized MEV-Boost: Can reach 4-5%+ for efficient operators. Yields are lower than early post-Merge highs due to more staked ETH diluting issuance but remain competitive with traditional assets.
Rewards are paid in ETH and fluctuate daily based on network conditions. Stake” to enforce good behavior. Small deductions for downtime or missed duties a few dollars per day typically. Encourages high uptime.
Severe penalty for malicious actions, signing conflicting blocks or attestations. Immediate burn: Up to ~1 ETH for a 32 ETH validator. Forced exit over ~36 days, with gradual balance drain. If many validators are slashed around the same time due to shared infrastructure bugs, penalties scale up—potentially losing the entire stake in extreme cases.
Slashing is rare mostly from misconfigurations, not maliceand preventable with proper setup diverse clients, redundant nodes. Other risks includes: Smart contract bugs in pools, centralization in large providers, or regulatory changes.
Many pooled/liquid staking options, Lido’s stETH reduce technical risks but introduce counterparty trust. Staking rewards provide a way to earn passive yield on ETH while securing the network, with current rates around 3% APY on average. It’s a balance of incentives and deterrents to ensure decentralization and reliability.