The New York Stock Exchange (NYSE) has proposed amendments that will create staking rewards on an Ethereum-based exchange-traded fund (ETF). The proposal seeks to list and trade shares of the Bitwise Ethereum ETF with staking capabilities, marking an advancement in cryptocurrency-related financial instruments. If passed, the ETF would open an opportunity for investors to obtain staking rewards using traditional investment platforms instead of directly owning crypto.
Bitwise Proposes Ethereum ETF with Staking
In a recent filing with the U.S. SEC, Bitwise has requested approval to launch an Ethereum ETF that incorporates staking. Under the 19b-4 rule change filing, this proposal attempts to amend NYSE regulations to facilitate the listing and trading shares in this ETF.
Staking is a process that allows a user to lock his or her cryptocurrency in order to validate blockchain transactions and earning additional tokens as rewards. At present, staking is mostly viable for those who want to hold and manage digital assets directly. Staking within an ETF would introduce another access channel to a regulated financial instrument that would use this mechanism to provide broad access to the Ethereum staking rewards.
According to a recent CoinGape report, the crypto firm Bitwise has been expanding its presence in ETFs with its latest fund designed to track corporate Bitcoin holders. The newly launched OWNB ETF will monitor companies holding at least 1,000 BTC in their corporate treasuries, offering investors indirect exposure to Bitcoin.
Regulatory Review and SEC Considerations
The SEC is expected to conduct a detailed review before deciding on Bitwise’s proposal. The agency has previously expressed concerns regarding cryptocurrency-based financial products, particularly around investor protection, potential fraud, and market stability.
Regulators will examine how staking rewards are structured within the ETF, including custody arrangements and distribution mechanisms. Additionally, they will assess whether introducing staking in an ETF format introduces new risks to financial markets. While the proposal could expand investment options, approval is not guaranteed.
BlackRock Acknowledges Limitations of ETH ETF Without Staking
In a recent speech at the Digital Asset Summit, BlackRock’s head of digital assets, Robbie Mitchnick, described the firm’s Ethereum ETF as a “tremendous success” but pointed out a key drawback— the absence of staking. He emphasized that staking yields are a crucial component of generating investment returns in the Ethereum ecosystem. Even though staking was left out of the initial ETF launch, Mitchnick said adding it could boost investor engagement.
Despite the potential benefits, Mitchnick acknowledged that incorporating staking into Ethereum ETFs presents regulatory and structural challenges. He noted that the process is complex and requires more than just regulatory approval.
The Bitwise Ethereum ETF, if approved, would be the first in the U.S. to offer staking rewards. This could open opportunities for other fund issuers to introduce similar products, further increasing institutional involvement in Ethereum-based investments. However, the final decision remains with the US SEC, which continues to evaluate the risks and benefits of crypto-based ETFs.
The post Just In: Bitwise Files Proposal To Enable Staking on Ethereum ETF appeared first on CoinGape.
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