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SEC Considers Allowing Staking for 21Shares Core Ethereum ETF

The U.S. SEC is reviewing a proposal from Cboe BZX Exchange to permit the 21Shares Core Ethereum ETF to engage in staking activities, potentially enhancing returns for investors.
Published on 2025-02-20

SEC Reviews Proposal for Ethereum ETF Staking

The U.S. Securities and Exchange Commission (SEC) has responded to a filing by Cboe BZX Exchange, representing 21Shares, which seeks public input on a proposal to allow the 21Shares Core Ethereum ETF to engage in staking activities with its ether (ETH) holdings. If approved, this would enable the ETF to generate additional returns from its ETH assets, potentially benefiting investors.

Key Details of the Proposal

The filing specifies that staking would only involve ether owned by the Trust, avoiding "delegated staking" or "staking as a service" models. This initiative follows a similar request by NYSE Arca last week for Grayscale's Ethereum ETFs, signaling growing interest in integrating staking within ETF structures.

SEC's Evolving Stance on Cryptocurrency

The SEC's approach to cryptocurrency has shifted over time. Last summer, spot Ethereum ETFs were approved, prompting many firms to remove staking from their ETF proposals. Under former Chair Gary Gensler, proof-of-stake tokens were classified as securities, but the SEC's stance has softened, particularly during the Trump administration, which established a crypto task force to reassess token classifications.

Industry Insights and Market Impact

Ruslan Lienkha, YouHodler's Chief of Markets, recently highlighted the potential for regulatory frameworks supporting staking to drive broader adoption and institutional engagement. Ethereum's yield-generating opportunities through staking could attract increased liquidity, making it more appealing to investors.

Recent 13F filings reveal a surge in institutional ownership of Ethereum ETFs, rising from 4.8% to 14.5% in Q4, while Bitcoin ETF ownership slightly declined from 22.3% to 21.5%. This shift underscores growing institutional interest in Ethereum-based investment vehicles.

The SEC's decision on this proposal could significantly impact the future of cryptocurrency ETFs and staking activities within regulated investment products.

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