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SEC Acknowledges Ethereum and XRP ETF Applications, Opening Comment Period
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SEC Reviews Ethereum ETF Staking Proposal Amid Changing Crypto Stance
The U.S. Securities and Exchange Commission (SEC) has officially acknowledged a 19b-4 filing from Cboe BZX Exchange on behalf of 21Shares, seeking approval to enable staking for its Ethereum ETF.
If granted, this would allow the fund to generate additional returns by staking its Ether (ETH) holdings, with those rewards potentially benefiting investors.
According to the filing,
"The ether staked by the Sponsor on behalf of the Trust will consist exclusively of ether owned by the Trust."
It further clarifies that the staking activities "will not constitute 'delegated staking' and will not form part of a 'staking as a service' offering."
This proposal follows a similar move by NYSE Arca, which recently filed for permission to stake ETH in Grayscale’s Ethereum ETFs.
Shift in SEC's Approach to Ethereum Staking
The SEC had previously approved spot Ethereum ETFs last summer, but many issuers chose to exclude staking from their registration statements due to regulatory uncertainty.
Under former Chair Gary Gensler, the SEC classified proof-of-stake tokens as securities, leading to concerns about compliance risks.
However, the regulatory stance has evolved under the Trump administration, with the SEC forming a dedicated crypto task force and considering frameworks that could clarify staking’s legal status.
Market analysts believe this shift could encourage wider institutional participation in staking.
In December, the YouHodler’s Chief of Markets Ruslan Lienkha, said,
"Under the Trump administration, staking is likely to receive the necessary legal framework, paving the way for broader adoption, including participation by institutions."
Institutional Interest in Ethereum ETFs on the Rise
Ethereum ETFs have seen significant growth in institutional ownership.
Recent 13F filings reveal that overall ETH ETF ownership increased from 4.8% to 14.5% in the fourth quarter, while Bitcoin ETF ownership declined slightly from 22.3% to 21.5%.
This suggests that institutional investors are showing stronger confidence in Ethereum-based products, particularly as staking introduces the potential for additional yield.
SEC Acknowledges XRP ETF Filings, Opening Public Comment Period
In a separate development, the SEC has acknowledged Nasdaq’s filing for the CoinShares XRP ETF, initiating a 21-day public comment period.
This follows Nasdaq’s earlier submission of 19b-4 forms proposing rule changes to list both XRP and Litecoin ETFs.
While this acknowledgment does not guarantee approval, it signals the SEC’s willingness to review crypto investment products more openly than in previous years.
Recently, the SEC has also accepted spot XRP ETF filings from 21Shares, Grayscale, and Bitwise, with applications from Canary Capital and WisdomTree still pending.
XRP ETF Approval Odds Increase Amid Changing Regulatory Landscape
XRP, currently priced at $2.69, has climbed the ranks to become the third-largest cryptocurrency by market capitalisation.
XRP is the only top 10 token that has gained value over the past 7 days.
Analysts are cautiously optimistic about the approval of XRP ETFs, with Bloomberg ETF analysts James Seyffart and Eric Balchunas estimating a 65% chance of approval.
Prediction markets, such as Polymarket, place those odds even higher at 78% by the end of 2025.
The SEC’s approach to XRP has evolved significantly since its legal battle with Ripple Labs.
A federal court ruling in August 2024 determined that XRP itself is not inherently a security, though it could be classified as one under specific conditions.
The latest filings suggest the SEC is now referring to XRP as a commodity, aligning its classification with Bitcoin and Ethereum.
Growing Demand for Crypto ETFs Beyond Ethereum and XRP
The rising demand for crypto ETFs extends beyond Ethereum and XRP, with issuers actively exploring new products.
The SEC has already rejected Solana ETF applications from at least two issuers and signaled reluctance toward approving additional crypto ETFs under the Biden administration.
However, with the shifting regulatory environment, new applications for Solana, Litecoin, and Dogecoin ETFs continue to emerge.
Meanwhile, Nasdaq recently listed the Hashdex Nasdaq Crypto Index U.S. ETF, marking the first spot crypto index fund in the country.
This indicates a broader expansion of the crypto ETF market, with fund managers also experimenting with mechanisms like staking and in-kind redemptions.
Trump Administration's Crypto Policies Influence Market Sentiment
Since taking office, the Trump administration has taken a more crypto-friendly stance, with efforts to position the U.S. as a leader in the digital asset space.
Ripple CEO Brad Garlinghouse remains optimistic about XRP ETF approvals, citing increased institutional interest and evolving regulations.
As the SEC continues reviewing pending ETF applications, market participants will be watching closely to see how regulators handle crypto investment products in the months ahead.
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