Cboe has applied to add staking capabilities to the 21Shares ETH ETF

This will help increase the attractiveness of the trust by adding a new yield component

13.02.2025 - 12:10

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What’s new? The Cboe BZX exchange has proposed a rule change to the US Securities and Exchange Commission (SEC) to allow staking within the 21Shares Core Ethereum (ETH) ETF. The move is key because until now, US ETH ETFs have avoided staking due to regulatory issues with securities classification and the difficulty of managing stakes within a regulated framework.

Moreover, ETFs can offer investors additional returns, effectively bridging the gap between the benefits of direct ETH ownership and those offered by an ETF structure.

What else is known? The filing comes after the SEC previously gave the green light to ETH ETFs without staking features. Last year, it approved the 21Shares Core Ethereum ETF, as well as trusts from large asset managers such as BlackRock and Fidelity.

If the staking feature is approved, it could come to other cryptocurrency ETFs as well. This would help increase their appeal by adding a new yield component.

In staking, participants lock their cryptocurrency to secure the Ethereum blockchain, receiving rewards as the network transitions to Proof-of-Stake. However, the SEC remains cautious because staking could be classified as a security under the Howey test. It defines an investment as a security if it involves investing in a common enterprise with the expectation of profits derived from the efforts of others.

Previously, NYSE Arca, a subsidiary of NYSE Arca, filed a Form 19b-4 on behalf of Grayscale to create a Cardano exchange-traded fund.

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