New York Stock Exchange Proposal for Ethereum ETFs

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

According to a Mar. 20 filing with the SEC, the proposal seeks regulatory approval to integrate staking into the ETF’s structure. If approved, this amendment 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, thus lowering security risks by ensuring the staked ETH remains in the wallet.

Ethereum ETFs were launched in July 2024, but have attracted less interest compared to Bitcoin (BTC) ETFs. Data from SoSoValue shows that, as of Mar. 20, Ethereum ETFs had $6.79 billion in total net assets, but experienced $84 million in cumulative outflows over the past week. Conversely, spot Bitcoin ETFs have accumulated $94.47 billion in total net assets.

At the Digital Asset Summit on Mar. 20, Robbie Mitchnick, head of digital assets at BlackRock, noted that the lack of staking rewards makes Ethereum ETFs less appealing. He emphasized that staking is crucial for Ethereum and could significantly boost investor profits. Allowing staking could transform the Ethereum ETF landscape and draw more investors in.

Staking was introduced when Ethereum transitioned to proof-of-stake in 2022, allowing ETH holders to lock up their tokens in exchange for rewards. Current yields vary between 2% to 7% annually, making it a compelling investment. According to Coinbase data, ETH staking deposits have exceeded 33 million ETH, representing 27% of the total ETH supply in circulation.

Moreover, staking may enhance Ethereum’s market performance, especially as ETH has dropped 47% from its December high of $4,105 to $1,990, positioning it as one of the weaker major cryptocurrencies. If ETFs are permitted to stake, demand for ETH could increase as more institutional investors enter the market.

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In addition, Ethereum supply on crypto exchanges has reached a decade-low, raising questions about ETH’s price recovery.