A potentially groundbreaking development is unfolding in the world of crypto exchange-traded funds (ETFs) as leading asset managers propose integrating staking rewards directly into their Ethereum and Solana offerings. This strategic move could fundamentally alter how these investment vehicles generate returns and compete within the financial landscape, bridging the gap between decentralized finance (DeFi) incentives and traditional investment products.
Integrating Staking into ETFs
Digital asset managers Bitwise and 21Shares have quietly updated their S-1 filings with the U.S. Securities and Exchange Commission (SEC), introducing language that suggests their proposed Ethereum and Solana ETFs may include the ability to stake their underlying crypto holdings. If approved, this would be a significant departure from current U.S.-listed crypto ETFs, which are limited to passive asset holding. Staking allows the funds to earn additional income by participating in the validation of transactions on proof-of-stake blockchains. This amendment follows months of lobbying by issuers for regulatory clarity around staking income, indicating that the SEC may be softening its stance on the feature, especially given the competitive pressure from on-chain yield opportunities available globally.
Reshaping Yield and Market Competition
The inclusion of staking rewards could dramatically impact the appeal and performance of ETH and SOL ETFs. With Ethereum offering typical staking rewards of 3-4% and Solana ranging from 7-8% annually, these yields could potentially offset or even exceed the ETFs' management fees, which are generally around 0.20-0.30%. This shift would introduce "net yield" as a new, crucial performance metric for investors comparing crypto ETFs, moving competition beyond just management costs and liquidity. Should these amendments receive SEC approval, it would mark a pivotal moment, allowing traditional financial products to offer the yield-generating benefits previously confined to the on-chain crypto economy.
