In This Article:
The Securities and Exchange Commission delayed ruling on whether or not to permit so-called "staking" in Grayscale Investment’s Ethereum ETFs, saying more time is needed to consider changing the rules.
The SEC said in an April 14 filing that it will approve, reject, or institute further proceedings on, staking in the $1.9 billion Grayscale Ethereum Trust ETF (ETHE) and the $712 million Grayscale Ethereum Mini Trust ETF (ETH) by June 1.
The agency also delayed permitting in-kind redemptions for VanEck’s Bitcoin and Ethereum ETFs, according to another April 14 filing. VanEck manages the $1.2 billion VanEck Bitcoin ETF (HODL) and the $67.7 million VanEck Ethereum ETF (ETHV). The rule change would permit redemptions in the underlying asset, and not necessarily in cash, and avoids a taxable event.
Ethereum’s outflows and price declines may be relieved if staking—the cryptocurrency’s validation mechanism, which acts as a sort of yield device—were introduced, BlackRock Inc.’s (BLK) digital assets chief Robert Mitchnick said recently. Staking offers participants rewards in exchange for locking up their crypto for a period, and permitting that in the Ethereum ETF would stoke investor interest, BlackRock said.
The decision to delay comes on the heels of Paul Atkins being named SEC Commissioner on April 9. Atkins was tapped to lead a more crypto-friendly commission, departing from the skeptical and cautious crypto stance of predecessor Gary Gensler. The crypto industry largely endorsed President Donald Trump and his promise to reduce restrictions on digital currencies.
Ethereum ETFs' Steep Decline
Ethereum ETFs have fallen hard this year, with ETHE’s price cut in half amid $565.6 million in outflows as rival cryptocurrencies appeal to investors. Bitcoin ETFs, on the other hand, have gained recently, and the iShares Bitcoin Trust (IBIT) has pared some losses so that it's now down 9% since the year began.
ETHE is the largest spot-ethereum ETF, and the New York Stock Exchange sought permission to permit staking in the fund in early March.
Grayscale, based in Stamford, Connecticut, didn't immediately respond to a request seeking comment.