Grayscale Investments met with the U.S. Securities and Exchange Commission’s Crypto Task Force in Washington D.C. on April 21, advocating for rule changes to permit staking in its Ethereum exchange-traded products. In a memorandum summarizing the meeting, Grayscale revealed that since launch through February 2025, U.S. Ethereum ETPs have foregone approximately $61 million in staking rewards (excluding daily compounding), which instead flowed to non-U.S. ETPs and other stakers.
Key Meeting Details
Craig Salm, Grayscale’s chief legal officer, requested amendments to the Form 19b-4 filings for the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH). The firm noted that U.S. Ethereum ETPs collectively manage $8.1 billion in assets but are currently barred from staking, unlike their European and Canadian counterparts.
Benefits of Staking
Grayscale emphasized that staking would strengthen the Ethereum network’s security while delivering additional returns to shareholders. “Through staking, U.S. ETH ETPs will participate in validating transactions on the Ethereum network, contributing to the security and efficiency of the Ethereum blockchain, and in return, earn ETH rewards,” the memorandum stated. The firm also argued that current spot ETH ETPs do not represent the underlying asset completely without staking.
Liquidity Strategy
To address redemption risks during unstaking periods, Grayscale proposed a multi-layered liquidity approach: a “Liquidity Sleeve,” short-term financing with custodians and liquidity providers, and a revolving credit facility. These measures are designed to ensure investors can redeem shares without disruption.
International Precedents and Risk Management
The memo cited successful staking integration in markets like Europe and Canada, where trading efficiency remained intact. Grayscale acknowledged potential tax implications and slashing risks but expressed confidence in operational safeguards and custody arrangements with Coinbase Custody to manage exposure. “By drawing on traditional finance analogues and experience managing ETPs facing similar liquidity challenges, we can effectively and responsibly stake ETH in our ETH ETPs,” the firm concluded.