The emerging strategy for crypto staking Exchange-Traded Funds (ETFs) is taking a pragmatic, phased approach, signaling an initial reliance on established centralized partners before a broader embrace of decentralized finance (DeFi). This calculated entry point aims to navigate regulatory landscapes while gradually integrating with the innovative potential of blockchain-based protocols.
A Calculated Entry: Centralized Partners Pave the Way
Following the Securities and Exchange Commission’s (SEC) clarification that liquid staking activities are not securities offerings, the path for staking-enabled crypto ETFs has become clearer, leading to filings such as the VanEck and Jito Solana liquid staking ETF. Despite this regulatory green light, most ETF issuers are expected to initially partner with centralized staking providers. Experts like Max Shannon of Bitwise and Sid Powell of Maple Finance anticipate this preference due to the clearer compliance frameworks and established legal accountability offered by centralized entities such as Coinbase or Fidelity. While a few issuers may directly engage with liquid staking protocols, the broader strategy is to leverage the operational simplicity and trusted custodial relationships of centralized finance (CeFi), even as these custodians actively build bridges into DeFi protocols.
The Path to Decentralization and DeFi's Transformation
This initial centralized approach is not seen as a permanent state, but rather a stepping stone towards eventual hybrid or direct DeFi integrations. As regulatory environments mature, a gradual shift is expected, positioning institutional capital to flow through trusted custodians into high-performing decentralized staking infrastructure. This institutional validation is poised to profoundly transform liquid staking protocols, elevating them from experimental infrastructure to core financial architecture. Such a development could channel billions into these protocols, significantly boosting their assets under management (AUM) and increasing the total value locked (TVL) in liquid staking tokens, thereby enhancing their liquidity and utility. Misha Putiatin of Symbiotic also highlights that this shift allows assets to generate multiple revenue streams, driving ETFs to diversify their offerings beyond traditional capital allocation, albeit with a note of caution regarding potential concentration risk in a few protocols which could attract closer regulatory oversight.
