The post Grayscale’s Ethereum ETFs May Earn Staking Rewards with SEC Custody Safeguards Under New Proposal appeared on BitcoinEthereumNews.com.

The Securities and Exchange Commission (SEC) has opened the door for Grayscale’s Ethereum exchange-traded funds (ETFs) to earn staking rewards while ensuring custody protections. This significant proposal, published by the SEC following NYSE Arca’s filing, could mark a turning point in how digital assets are managed within ETFs. “Staking by the sponsor will not result in the Ethereum held by the Trust moving out of the custody of the Custodian,” as stated in the filing, which highlights the protective measures in place. This article discusses Grayscale’s recent SEC filing that could enable its Ethereum ETFs to earn staking rewards while upholding stringent custody requirements. Grayscale’s Innovative Proposal for Ethereum ETFs The SEC recently approved a filing from NYSE Arca that proposes allowing Grayscale to enable its Ethereum ETFs to participate in Ethereum’s proof-of-stake validation system. This initiative, initiated in February and published on February 25, addresses the growing demand for crypto investment vehicles that can generate income through staking. According to the details of the proposal, the Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF could stake a portion of their holdings with trusted staking providers. This includes utilizing current custodians without pooling assets with other entities, which has raised regulatory flags in the past. Understanding the Implications of Staking in ETFs Staking presents a unique opportunity for ETFs in the evolving landscape of digital assets. As per the proposal, Grayscale would be responsible for staking Ethereum in a manner that preserves custody and adherence to regulatory standards. Unlike traditional staking services that risk liquidity issues and regulatory scrutiny, Grayscale’s approach is designed to maintain strict separation from external validators. The filing clarifies that any staked Ethereum will remain under custodial control, minimizing risks associated with the movement of these assets. “This process does not involve the staked…

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Filed under: News - @ February 26, 2025 6:15 am