SEC Postpones Decision on Staking Proposal for Grayscale Ethereum ETFs

The U.S. Securities and Exchange Commission on Monday delayed its decision on a proposed rule change that would enable Grayscale’s spot ETH exchange-traded funds to engage in staking on Ethereum. 

The Securities Commission has extended its deadline to approve or reject the proposal for the funds to stake ETH—or to begin proceedings on the matter—to June 1, the regulator said in a letter dated April 14. 

The NYSE Arca applied on Feb. 14 to secure regulatory approval for the Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF to participate in Ethereum's proof-of-stake validation system while maintaining existing custody protections. The SEC acknowledged the application nearly two weeks later. 

Staking is the process of pledging cryptocurrencies to a network such as Ethereum in order to help it validate transactions, making the network more secure. On Ethereum, users receive Ethereum tokens as rewards for loaning their crypto to the network. 

The Commission’s decision to postpone its decision on NYSE Arca’s staking plan—a proposal the regulator initially deemed risky when it greenlighted a rash of spot Ethereum ETFs last year—comes at a particularly turbulent time for the cryptocurrency market and amid an escalation in trade tensions between Washington D.C. and Beijing. 

The digital asset market has lost 3% of its total value in the past month, with Ethereum’s price falling 15% to $1,640 over the same period, CoinGecko data shows.  

It is unclear whether the deadline extension suggests regulators will be less likely to approve staking for Grayscale’s Ethereum ETFs. The Securities Commission has become increasingly crypto-friendly under President Donald Trump, welcoming a new pro-digital assets chairman Paul Atkins last week and dismissing several cases it brought over the past few years against crypto companies such as Coinbase, Ripple Labs and Kraken. 

The SEC did not immediately return Decrypt’s request for comment on the matter.

ETF experts such as Bloomberg analyst James Seyffart have been predicting that the regulator will give issuers of spot Ethereum ETFs the go-ahead to participate in staking on the Ethereum blockchain by the end of 2025. 

The Commission approved Ethereum ETF options earlier this month, which may be a positive sign that its approval of NYSE Arca’s staking proposal is soon to follow. 

“Tons of people asking me about Ethereum ETF Staking approval timelines,” Seyffart said in a social media post published on April 9. “It[‘]s possible they could be approved for staking early, but the final deadline is at the end of October.”

Edited by James Rubin