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Unlocking Potential: How Staking Could Transform Ethereum ETFs in the Crypto Market

March 21, 2025
Smart Money

Growing Momentum for Staking in Ethereum ETFs: BlackRock and NYSE Arca Lead the Charge

March 20, 2025 — 4:04 PM EDT

The landscape for digital asset investment is evolving, particularly as discussions around staking for Ethereum exchange-traded funds (ETFs) gain traction. Recently, BlackRock’s Head of Digital Assets, Robert Mitchnick, shared insights at a conference about the potential advantages of allowing staking within spot Ethereum ETFs, which have been perceived as underperforming relative to their Bitcoin counterparts.

BlackRock’s Perspective on Staking

At the forefront of this conversation, Mitchnick expressed optimism about how permitting Ethereum ETF issuers to stake the cryptocurrency could elevate investor demand. He noted, “There’s obviously a next phase in the potential evolution of [ether ETFs]. A staking yield is a meaningful part of how you can generate investment return in this space, and all the [ether] ETFs at launch did not have staking.”

Historically, the U.S. Securities and Exchange Commission (SEC), under the leadership of Gary Gensler, adopted a more cautious approach towards crypto investment products, making the prospect of staking for Ethereum ETFs seem unlikely. However, the regulatory environment appears to be shifting towards a more crypto-friendly stance.

Proposed Rule Change by NYSE Arca

Coinciding with BlackRock’s assertions, NYSE Arca has filed a proposed rule change that would allow Bitwise’s ether ETF to earn yield through staking. This move is part of a broader trend, as similar proposals have also been put forward by Grayscale, 21Shares, and Fidelity, all indicating a collective push to incorporate staking as a feature in Ethereum ETF offerings.

The ability for ETFs to stake and generate yield could represent a significant enhancement to their revenue potential. Mitchnick believes that successful implementation of such changes could lead to "a step change upward in terms of what we see the activity around those products is."

Comparative Performance of Ethereum and Bitcoin ETFs

Despite the substantial capital inflows into spot Ethereum ETFs—collectively attracting billions of dollars—performance remains comparatively modest when juxtaposed against Bitcoin ETFs. For example, BlackRock’s ether ETF currently manages approximately $2.3 billion in assets, a stark contrast to its Bitcoin ETF, which boasts nearly $48 billion in assets under management, according to data from The Block.

This disparity highlights a crucial challenge for Ethereum ETFs: to attract more investors and increase their market share within the digital asset landscape. The introduction of staking could serve as an attractive feature for potential investors seeking efficient returns.

Conclusion

As the dialogue surrounding staking for Ethereum ETFs continues to evolve, it brings with it a wave of optimism among industry leaders. With major firms like BlackRock advocating for regulatory changes and the NYSE Arca taking steps to facilitate these advancements, the possibility of integrating staking into Ethereum ETFs could transform the investment landscape for digital assets. Industry experts will be watching closely to see how these regulatory developments unfold in the coming months and their potential impact on market dynamics.

Disclaimer

This article is provided for informational purposes only and is not intended as legal, tax, investment, financial, or other advice.