NYSE submits proposal to enable staking of Bitwise Ethereum ETF

The New York Stock Exchange has submitted a proposal to the U.S. Securities and Exchange Commission to allow staking for the Bitwise Ethereum exchange-traded funds. 

According to a Mar. 20 filing with the SEC, the proposal seeks regulatory approval to integrate staking into the ETF’s structure. This amendment, if approved, would allow the fund to use a method known as “point-and-click” staking to stake a portion of its Ethereum (ETH) while maintaining control over the assets. This approach lowers security risks by ensuring the staked ETH remains in the wallet.

Ethereum ETFs were launched in July 2024, but interest in them has been lower than that of Bitcoin (BTC) ETFs. According to SoSoValue data, as of Mar. 20, Ethereum ETFs had $6.79 billion in total net assets, but during the previous 7 days, there has been $84 million in cumulative outflows. In contrast, spot Bitcoin ETFs have garnered $94.47 billion in total net assets.

Speaking at the Digital Asset Summit on Mar. 20, Robbie Mitchnick, head of digital assets at BlackRock, stated that Ethereum ETFs are less attractive due to the absence of staking rewards. He stressed that staking is an essential component of Ethereum and a significant means of profit for investors. According to Mitchnick, enabling staking could signal a huge change for Ethereum ETFs, attracting more investors.

Staking, introduced when Ethereum switched to proof-of-stake in 2022, lets ETH holders lock up their tokens in exchange for rewards. With current yields ranging from 2% to 7% annually, it’s a valuable investment. Meanwhile, ETH staking deposits have surpassed 33 million ETH, accounting for 27% of the total ETH supply in circulation, as per Coinbase data.

In addition to ETFs, staking may improve Ethereum’s market performance. ETH has dropped 47% from its December high of $4,105 to $1,990, making it one of the weakest-performing major cryptocurrencies. If ETFs are permitted to stake, demand for ETH may rise as more institutional investors enter the market.