U.S. Ethereum exchange-traded funds (ETFs) could potentially start staking their tokens as early as May, according to James Seyffart, an analyst at Bloomberg Intelligence. This news follows the U.S. Securities and Exchange Commission (SEC) authorizing exchanges to list options contracts tied to spot Ethereum ETFs after approving similar Bitcoin ETF options in September 2021.
However, issuers are still awaiting the SEC’s approval to allow Ether ETFs to offer staking services, having filed several requests for permission earlier this year. clearance for staking could come as early as May, but it will likely take until the end of 2025.
Options, financial derivatives that give investors the right, but not the obligation, to buy or sell an asset at a predetermined price before a certain date, already allow investors to hedge or speculate on Ethereum’s token prices. Staking, on the other hand, involves locking up Ether to support network operations, such as validating transactions, in exchange for rewards.
Incorporating staking services into Ether ETFs would offer investors a way to earn rewards by participating in Ethereum’s proof-of-stake network. The SEC’s approval of Ether ETF options could help spur adoption, as could the eventual approval of requests to allow in-kind creations and redemptions for Bitcoin and Ether ETFs.
Jeff Park, Bitwise Invest’s head of alpha strategies, has called the emergence of options markets tied to spot crypto ETFs a “monumental advancement” in crypto markets and a “compelling opportunity” for investors. However, staking could be the most significant step forward for Ether funds, as some analysts believe it is a crucial part of generating investment returns in this space.