Proposed ether ETFs would not stake their ETH, new filings clarify
Amendments that nix the possibility for planned funds to earn yield by staking ETH come just ahead of a key SEC deadline
Trichaiwat/Shutterstock modified by Blockworks
Issuers hoping to launch spot ether ETFs are making clear to the Securities and Exchange Commission that they would not stake ETH held by the funds.
Staking ether involves depositing ETH to help secure the Ethereum blockchain — and earning yield in exchange.
Tuesday filings by Cboe — the exchange that seeks to list spot ether ETFs by Fidelity, Franklin Templeton, Ark Invest, Invesco and VanEck — indicate that this possibility would be off the table for such funds, if approved.
“Neither the trust, nor the sponsor, nor the custodian, nor any other person associated with the trust will, directly or indirectly, engage in action where any portion of the trust’s ETH becomes subject to the Ethereum proof-of-stake validation or is used to earn additional ETH or generate income or other earnings,” the filings state.
Nasdaq included nearly identical language in a filing for the iShares Ethereum Trust, also dated May 21. So too did NYSE Arca on behalf of Grayscale for its Ethereum Mini Trust and for the planned Bitwise Ethereum ETF.
The amendments to the so-called 19b-4s — documents filed by stock exchanges, in this case, detailing a proposed rule change — come just ahead of the SEC’s May 23 deadline to rule on an ether ETF proposal by VanEck.
The regulator, as it did with spot bitcoin ETFs, is expected to rule on all the ether ETF 19b-4 proposals at once. It would then need to rule on registration statements, or S-1s, submitted by the fund issuers themselves, which segment observers note could come later on.
Read more: Politics, amendments, staking: Making sense of the ether ETF developments
“Still a potentially long way from a launch,” Bloomberg Intelligence analyst James Seyffart said in a Tuesday X post. “But these filings prove that all of the rumors and speculation and chatter have been accurate.”
Seyffart is referring to the increased optimism around spot ether ETF approval in recent days after engagement between the SEC, stock exchanges and ETF issuers seemed to accelerate.
Several fund groups had in recent months noted their intent to stake a portion of the ether trusts’ assets via staking providers — a feature industry watchers noted the SEC was likely not ready to allow.
Ark Invest CEO Cathie Wood indeed said in a March interview with Blockworks co-founder Jason Yanowitz that she believed the staking language in filings was “a sticking point” for the SEC.
Ark Invest and 21Shares, which previously proposed for their planned fund to stake the fund’s ETH, nixed such language from its amended S-1 filed on May 10.
The SEC has not made clear its stance on whether ether is a commodity, like bitcoin, or a security — a question that continues to weigh on the possibility of spot ether ETF approval.
Read more: SEC has been investigating ETH for over a year, new court filing shows
Alex Thorn, head of research at Galaxy Digital, said in a Monday X post that the SEC could try to “thread a needle” by labeling “staked ETH” a security while conceding that ether itself is not.
Thorn added: “That would be somewhat congruent with their various court cases, as well as with reports about their various investigations, and perhaps allow SEC to approve ethereum ETFs while maintaining their previously stated/arguing opinions.”
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