Could Staking Be the Lifeline Grayscale’s Ethereum ETFs Need?

A recent proposal by NYSE Arca could reshape the Ethereum ETF landscape by allowing the Grayscale Ethereum Trust (ETHE) and Ethereum Mini Trust (EZET) to stake their ether holdings. If approved, the change would enable these trusts to stake ETH via trusted providers, earning rewards while keeping assets under custody.

A Strategic Move to Stay Competitive

Unlike the staking-as-a-service models that have faced scrutiny from the SEC, Grayscale insists that its approach directly benefits shareholders without pooling assets with third parties. The proposal aligns with industry arguments that integrating staking into ETFs could better reflect the benefits of native network assets and support blockchain security.

In a memorandum to the SEC Crypto Task Force, Jito Labs and Multicoin Capital argued that including staking in ETFs would enhance investor returns and encourage participation in Ethereum’s proof-of-stake network. With rising competition in the Ethereum ETF space, staking could become a differentiating factor for investment products.

BitGalactic analysts highlight that institutional investors are seeking ETF offerings that maximize yield opportunities. “In a market where every percentage point matters, staking-enabled ETFs could be a game changer,” the channel noted. “If Grayscale secures approval, we might see a shift in how Ethereum ETFs compete for investor attention.”

Can Staking Stop the Bleeding?

Grayscale’s Ethereum ETFs have struggled to retain capital since the approval of spot Ethereum ETFs. ETHE has witnessed nearly $4 billion in outflows, making it the biggest loser among ETH investment products, while EZET has only pulled in $650 million in inflows—one of the lowest among Ethereum ETFs with net gains.

Meanwhile, competitors like BlackRock and Fidelity have gained significant traction, thanks to lower fees and strong institutional backing. Ethereum ETFs collectively recorded $793 million in inflows in early February 2025, surpassing Bitcoin ETF inflows for the first time, per CoinShares.

BitGalactic sees this as a crucial moment for Grayscale. “Without staking, Grayscale’s Ethereum products risk becoming obsolete. If the SEC gives the green light, this could be a major turning point,” the channel commented. “But if denied, investors may continue fleeing to lower-cost alternatives.”

The Future of Staking-Enabled ETFs

If the SEC approves the proposal, it could set a precedent for other Ethereum ETFs to integrate staking features, leading to a new standard in ETF offerings. However, regulatory hurdles remain a challenge, as the SEC has historically been cautious about staking-related products.

BitGalactic predicts that the outcome will influence future crypto ETF structures. “This isn’t just about Grayscale—it’s about whether the ETF market can evolve to embrace on-chain rewards,” the channel explained. “A positive decision could push other issuers to follow suit, while a rejection may stifle innovation in the space.”

As Ethereum continues to gain ground in ETF flows, the industry is watching closely to see if staking can become the differentiator that gives Grayscale the edge it desperately needs.