SEC Pushes Ethereum ETF Staking Decision to June

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on staking and in-kind redemptions for crypto ETFs, leaving many Ethereum supporters disappointed.

The agency has now set a new decision date for early June, giving itself more time to review proposals from issuers. This includes the Grayscale Ethereum Trust ETF and other crypto products from companies like WisdomTree and VanEck.

The SEC delayed its decision to allow more time for reviewing new rules that could let ETF investors earn additional income by staking the underlying asset (ETH).

Moreover, the regulator emphasized its focus on building a long-term strategy for digital asset regulation rather than making short-term decisions. It also pledged to consider input from industry leaders and insights from expert consultations.

Related: ETH Slips Against SOL but Bets on Its Upcoming Upgrade

Staking and In-Kind Redemptions

The SEC extended deadlines on several key decisions:

1. It postponed the decision date for the proposed rule change that would let the Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF offer ETH staking to clients from April to June 1. 
2. Additionally, the regulator is weighing whether to permit in-kind creations and redemptions for the VanEck Bitcoin Trust and VanEck Ethereum Trust, with a new review date set for June 3. This extension gives the SEC time to weigh the potential benefits and risks of introducing this method.

*The term “in-kind” refers to the process where investors use the underlying asset (such as BTC or ETH) instead of cash to create or redeem ETF shares. This method can help lower transaction costs and improve operational efficiency.

The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,

said Sherry R. Haywood, Assistant Secretary.

Market Conditions and Impact

At the same time, the SEC has already approved options trading for several spot Ethereum ETFs, allowing firms like BlackRock and Bitwise to expand their investment strategies. While other jurisdictions have already made similar decisions, the U.S. regulator continues to take a cautious approach, focusing on market stability and investor protection.

Furthermore, the current volatility in the cryptocurrency market continues to influence the SEC’s timeline. Review delays tend to occur during periods of digital asset instability and broader drops in market capitalization. Moreover, the regulator actively engages through its internal crypto task force, which meets with industry representatives. These meetings help the SEC gather feedback from key market players and apply their experience to shape effective regulations. 

Nevertheless, staking remains a particular point of focus, as it offers investors potential income, but also brings security risks that require thorough analysis.

Related: ETH Back in Play: SEC Approves Options Trading on Ethereum ETFs