NYSE asks SEC to allow staking for Grayscale's Ethereum ETFs

A division of the New York Stock Exchange has filed to permit staking for Grayscale’s spot Ethereum ETF, according to a filing on Friday. The U.S. Securities and Exchange Commission will have to approve the filing before the new product offering goes live.

With this latest SEC filing, the NYSE Arca joins a number of exchanges seeking approval to introduce staking features for existing Ethereum exchange-traded products. Earlier this week, Cboe BZX Exchange asked the SEC to allow ETH held in the 21Shares Core Ethereum ETF to be staked.

If approved, these ETFs will be able to generate additional returns on their significant ETH holdings, which could potentially be passed on to investors. NYSE’s filing notes “the Trust” would also receive a portion of the staking rewards.

The Grayscale Ethereum Mini Trust ETF, which launched after the company’s first conversion of its Ethereum Trust into an open-ended fund, has just under $1.3 billion worth of assets under management. Coinbase acts as a custodian for the 477,428 ETH held by the trust.

ETH ETFs were first approved for trade in the U.S. in the summer of 2024, following the approval of the first Bitcoin funds. However, under former Chairman Gary Gensler, the SEC explicitly prohibited ETH-based ETPs from staking the assets they managed due to potential violations of federal securities laws.

NYSE Arca’s filing notes that its staking practices, which would involve a dedicated custodian, are distinct from the “delegated staking” and “staking as a service” models “are materially different” from the “activities that the SEC has alleged to involve securities offerings,” in part because it will only involve ETH held by the fund.

“Staking through mechanisms such as ‘point-and-click’ staking would also permit the earning of rewards without certain additional risks,” the company writes. “Allowing the Trusts to stake their ether would benefit investors by permitting the Trusts to exercise their rights to free additional ether and help the Trusts better track the returns associated with holding ether.”

Acting Chair of the SEC, Mark Uyeda, has appointed Commissioner Hester Pierce to lead an agency task force to rewrite crypto policy and guidance for the industry. Earlier this month, the task force met with members of Multicoin Capital and Jito Labs to discuss the best ways to enable crypto ETFs to stake their funds.