The New York Stock Exchange (NYSE) has filed a proposal to the U.S. Securities and Exchange Commission (SEC) on the approval of the Bitwise Ethereum ETF to offer staking rewards. This change would make it possible for investors to earn returns via staking the ETH, marking a major progress for Ethereum-based exchange-traded funds.
Bitwise Ethereum ETF Proposal
On March 20, the NYSE submitted a filing that it wanted to allow the Bitwise Ethereum ETF to stake its ether. The proposal will enable the ETF to extend staking rewards, making it the first such ETF in the US market. If approved, the fund would allow investors to benefit from the staking rewards without the direct handling of the cryptocurrencies.
This comes amidst a similar application made by the Cboe BZX Exchange on March 11 that sought the green light to allow Fidelity to stake ETH on its own ETF. The NYSE’s approval suggests that the stake be taken through the point-and-click method, which mitigates the risk of theft because the staked ETH cannot leave the wallet.
Staking Process and Benefits
The staking involves a lock-up of at least 32 ETH for tokens and helps in the support of the Ethereum Network. In return, the users receive incentives in terms of staking rewards. Traditionally, staking was only possible if a person was self-directing their crypto. However, if the proposal is approved, it will mean that the ETF will bring staking to a broad audience through a regulated product.
BlackRock’s Robert Mitchnick points out that staking rewards have been previously omitted for Ethereum ETFs which is a drawback. He believes that staking is one of the important aspects that can help attract more investors. Even though BlackRock recently launched its own Ethereum ETF and it was successful, it would be beneficial to add staking as a value to boost its returns and increase investors’ interest.
Regulatory Review and Potential Impact
The regulation of this proposal’s outcome will hinge on aspects of market integrity, investors, and the possibility of fraud. The SEC will determine whether the proposed authorization of staking within an ETF may lead to risks in the financial markets. This development could pave the way for more traditional financial products to incorporate the option to stake Ether, thus engaging more institutions in the field of cryptocurrency investments.
Bitwise’s move is part of the wider trend where some of the largest financial companies such as BlackRock and Fidelity are launching cryptocurrency ETFs. These products give investors an opportunity to invest in digital assets without directly having to deal with the cryptocurrencies themselves.
The SEC’s approval remains uncertain, and the agency is expected to conduct a thorough review before making a final decision.
