Grayscale Initiates $150 Million Ether Staking Amid U.S. Crypto Fund Developments

According to Cointelegraph, Grayscale, a prominent crypto-focused asset manager, has staked $150 million worth of Ether following the introduction of staking for its exchange-traded products (ETPs). The company staked 32,000 Ether, valued at $150 million, as per data from blockchain platform Lookonchain. This transaction took place shortly after Grayscale launched staking for its Ether ETPs, marking it as the first U.S.-based crypto fund issuer to offer staking-based passive income for its funds. This strategic move allows Grayscale’s ETP and its shareholders to earn passive income through staking rewards, which will be considered as "assets of the fund," according to Grayscale’s ETP Staking Policy. After deducting sponsor and custodian fees, shareholders can earn up to 77% of the total staking rewards with Grayscale’s Ethereum Trust and approximately 94% with the Ethereum Mini Trust, based on the fee structures disclosed in SEC filings. Grayscale’s Ethereum Trust ETF (ETHE) and Ethereum Mini Trust ETF (ETH) are registered under the Securities Act of 1933, distinguishing them from ETFs governed by the Investment Company Act of 1940, which is the regulatory framework for traditional mutual funds. This structural difference highlights the unique nature of ETPs compared to ETFs under the 1940 Act. Grayscale’s initiative marks the launch of the first staking ETP in the U.S., with at least two additional Ether staking funds awaiting responses from the U.S. Securities and Exchange Commission (SEC) in October. The SEC faces deadlines on 16 altcoin ETPs this month, with at least two crypto staking funds, including 21Shares’ Core Ethereum ETF (TETH) and BlackRock’s iShares Ethereum Trust (ETHA), expecting decisions on October 23 and October 30, respectively. Meanwhile, the REX-Osprey Solana Staking ETF, launched in July, became the first Solana staking ETF under the Investment Company Act of 1940, allowing crypto ETFs to hold the majority of their spot assets directly and distribute staking rewards. Grayscale’s Solana fund, the Grayscale Solana Trust (GSOL), has also enabled staking and is awaiting regulatory approval for uplisting to an ETP. However, the ongoing government shutdown may delay regulatory responses to crypto ETP applications, as the SEC operates "under modified conditions" with limited staff until a funding bill is passed. The Senate is set to reconvene on the funding bill after repeated failures to reach an agreement. The government shutdown has heightened investor interest in cryptocurrency funds and decentralized assets amid growing uncertainty. Crypto ETPs recorded their highest-ever inflows last week, with $5.95 billion in cumulative investments, as reported by Cointelegraph.