Grayscale Investments has taken a significant step in the cryptocurrency market by announcing the first-ever staking rewards distribution for its Ethereum exchange-traded fund (ETF). This marks a historic moment as it is the first time a US-listed spot crypto exchange-traded product (ETP) has tied a payout to onchain staking activity.
Shareholders of the Grayscale Ethereum Trust ETF (ETHE) will receive approximately $0.08 per share as a result of the sale of staking rewards. This payout is scheduled for Tuesday, with the distribution based on holdings recorded at market close on the preceding Monday, as detailed in a press release issued on Monday.
Staking was activated for Grayscale”s Ethereum products on October 6, conducted through institutional custodians and third-party validator providers. This initiative positions ETHE and the Grayscale Ethereum Mini Trust ETF (ETH) as the first US-listed spot crypto ETPs to provide exposure to Ether staking.
Staking involves locking up cryptocurrency on a proof-of-stake blockchain to validate transactions and secure the network, rewarding participants with periodic payouts. In Grayscale”s case, these rewards are converted to cash and distributed to investors in US dollars instead of Ether (ETH).
Grayscale”s funds operate outside the Investment Company Act of 1940, which governs traditional US ETFs. This regulatory framework allows for staking but provides different protections compared to standard ETFs. Established in 2013, Grayscale Investments manages approximately $31 billion in assets.
Early trading data from Yahoo Finance indicates that the ETF experienced a rise of around 2% on the day of the announcement.
While Grayscale is currently the sole US-traded fund offering payouts linked to Ether staking, several other spot Ether ETFs from prominent asset managers are awaiting regulatory approval from the US Securities and Exchange Commission (SEC). In March, Cboe BZX submitted a proposed rule change to allow staking for the Fidelity Ethereum Fund, aiming to enable the fund to stake some or all of its Ether through third-party providers.
Additionally, BlackRock has registered a staked Ethereum ETF in Delaware as a preliminary step towards launching a product that would complement its existing spot Ether ETF, the iShares Ethereum Trust ETF (ETHA), which was introduced in July 2024 without staking capabilities.
The introduction of US spot Ether ETFs in July 2024 has led to substantial investor interest, with these funds attracting $9.6 billion in inflows during their inaugural year. Current data from CoinMarketCap shows that US spot Ether ETFs collectively manage around $18 billion in assets. The largest of these is BlackRock”s ETHA, valued at approximately $11.1 billion, followed by Grayscale”s ETHE at about $4.1 billion and the Grayscale Ethereum Mini Trust ETF at roughly $1.5 billion.
