28-4-2025 – Grayscale Investments has embarked on high-level discussions with the SEC’s Crypto Task Force, seeking permission for staking activities in their Ethereum-based exchange-traded products.
The asset manager’s petition highlights a stark disparity between US and international markets, with American investors potentially missing out on substantial returns. According to their calculations, US-based Ethereum ETPs, which command $8.1 billion in assets, have foregone roughly $61 million in potential staking rewards through February 2025.
“Our ETPs currently fall short of fully representing the underlying Ethereum capabilities,” notes a detailed memorandum from the meeting. This limitation stems from regulatory restrictions preventing staking activities, whilst their European and Canadian counterparts have successfully implemented such features.
The proposed framework includes sophisticated risk management strategies, featuring a novel “Liquidity Sleeve” mechanism and various short-term financing arrangements. These measures aim to address potential concerns about redemption capabilities during unstaking periods.
Craig Salm, Grayscale’s chief legal officer, emphasised the constructive nature of their engagement with regulators. The firm’s proposal extensively details how staking participation would enhance network security whilst generating additional shareholder value.
Drawing parallels with traditional finance, Grayscale has outlined comprehensive operational safeguards, including a partnership with Coinbase Custody. Their approach acknowledges inherent risks, including tax implications and technical challenges, whilst presenting mitigation strategies based on established market practices.
The initiative represents a broader push to modernise US cryptocurrency investment vehicles, with Grayscale arguing that current regulations have failed to keep pace with market evolution. Their proposal suggests that American investors are effectively subsidising international participants who currently benefit from staking rewards.
