- Grayscale amended its proposed spot Ethereum ETF to enable staking, aiming to mitigate inflation and preserve value for shareholders.
- Fidelity made a similar staking amendment to its own Ethereum ETF application earlier in the week.
- Despite these moves, analysts believe the SEC will likely reject spot Ethereum ETFs by the May 23rd deadline due to lingering concerns.
Grayscale Investments recently announced plans to add Ethereum staking to its proposed spot Ethereum exchange-traded fund (ETF). This comes after Fidelity amended its own spot Ethereum ETF application to include staking provisions earlier in the week.
Details of Grayscale’s Filing
In a preliminary proxy statement filed on Tuesday, Grayscale proposed four updates to its proposed Ethereum ETF, including:
- Allowing creation and redemption of shares for cash
- Enabling the trust to stake Ethereum held within the ETF
- Positioning the ETF to maintain parity with other similar staking products
- Mitigating inflationary effects of Ethereum’s proof-of-stake transition
Grayscale stated that adding staking would “allow the Trust to mitigate inflationary pressures” and “preserve the value of the Trust Estate for the ultimate benefit of ETHE’s shareholders.”
Uncertain Road Ahead for Approval
While the SEC approved several spot bitcoin ETFs earlier this year, Ethereum-based products face a murkier path.
According to Bloomberg ETF analyst James Seyffart, the SEC will likely reject spot ether ETF proposals by the May 23 deadline. Seyffart noted the SEC “hasn’t engaged with issuers on Ethereum specifics,” unlike their extensive engagement around bitcoin ETFs last fall.
Grayscale originally filed for its spot Ethereum ETF conversion in October 2021. However, amendments like staking provisions may not be enough to satisfy the SEC’s concerns over potential manipulation and liquidity issues in the Ethereum market.
