Forthcoming Ethereum ETF Staking: CBOE’s Filing; What It Means For ETH
By Vishakha Thakur
The Ethereum ETF market is heating up as CBOE BZX Exchange, a regulated U.S. equities exchange, has filed for staking to be permitted in Fidelity’s Ethereum ETF. Fidelity’s Ethereum ETF, or FETH, currently holds over $1 billion in assets under management. If Ethereum staking ETFs are approved by the U.S. SEC, it could be a game-changer for investors, as they will be able to earn staking rewards alongside potential ETF returns.
So, what does this mean for investors? Can staking make Ethereum ETFs even more attractive? How does ETF staking differ from regular staking? What are the existing Ethereum ETFs, their AUM, and how’s their performance? Stay with us as we decode the implications of this move.
What is staking, and how is it done?
Ethereum staking is the process of committing your ETH to the Ethereum network to become a validator. After becoming a validator, you can participate in network governance and earn ETH rewards. For regular stakers, the reward or yield is typically in the range of 3-4%.
Currently, Ethereum ETFs do not allow staking, meaning investors do not receive staking rewards. However, if staking becomes enabled, institutions and investors will benefit from Ethereum’s proof-of-stake mechanism, providing an opportunity to earn passive income just like regular stakers.
How does ETF staking differ from regular staking?
Regular staking gives users direct control over their staked ETH, while ETF staking is managed by a fund. In terms of rewards, regular stakers typically earn 3-4%, but ETF holders will receive distributed rewards after the asset manager takes their fee.
Regarding liquidity, ETH staking funds lock up assets, while ETF shares remain liquid, allowing investors to trade them on the stock exchange without affecting the underlying staked ETH.
The most significant difference is that ETFs follow SEC regulations, whereas regular staking interacts directly with the blockchain.
Impact on ETH’s price & investment opportunities
Ethereum’s current price is trading in the range of $1,900-$2,000, and banking giant Standard Chartered predicts that Ethereum could reach $10k by the end of 2025.
While Bitcoin Spot ETFs saw $921.4 million in net outflows last week, Ethereum Spot ETFs experienced $189.9 million in net outflows over the past three weeks, totaling $645.08 million. Gold ETFs have outpaced Bitcoin ETFs in AUM as investors have shifted towards gold, which has risen by 12.5%, while BTC has dropped by 19% in the past three months.
Currently, all eyes are on Ethereum’s Pectra upgrade, which is expected to boost its performance and make it more attractive to investors. According to Lido’s Institutional Head Kean Gilbert, institutional demand for staking-enabled ETFs is rising, and he predicts staking ETFs could launch by late 2025.
Lido is a liquid staking protocol on Ethereum that allows users to stake their ETH and receive liquid tokens such as stETH in return. If staking attracts more investors, Ethereum ETFs could see a significant boost in AUM.
Ethereum ETFs: AUM & Performance
As of March 17th, Ethereum ETFs have a total of over $5 billion in assets under management, with:
- Grayscale ETH ETF (ETHE): $3.46 billion
- BlackRock ETH ETF (ETHA): $2.32 billion
- Fidelity ETH ETF (FETH): $1.34 billion
- VaenEck ETH ETF (ETHV): $91.49 million
With staking-enabled ETFs, these numbers could increase significantly if institutional investors find ETH more attractive due to added staking rewards.
Conclusion
ETF staking simplifies Ethereum exposure for investors, but SEC approval is still uncertain. The SEC has postponed the approval process for many ETFs like Dogecoin, XRP, Solana, and Litecoin ETFs. Investors should keep an eye on SEC updates to make informed investment decisions.
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