Grayscale Enables Staking for Ethereum & Solana ETPs

Grayscale announced on Monday that its Ethereum ETFs, the Grayscale Ethereum Mini Trust ETF (ETH) and Grayscale Ethereum Trust ETF (ETHE), have become the first US-listed spot crypto exchange-traded products to enable staking. The asset manager described this development as a ‘first-mover milestone’ that distinguishes its products in the rapidly evolving digital asset landscape. This strategic move allows investors to earn additional yield on their Ethereum holdings while maintaining exposure to the underlying assets, creating a new value proposition for institutional and retail investors alike.

The staking capability extends beyond Ethereum products to include Grayscale Solana Trust (GSOL), which currently trades over-the-counter but awaits regulatory approval for conversion into a full ETP. If approved, GSOL would become one of the first spot Solana ETPs to offer staking rewards, further cementing Grayscale’s position as an innovator in the crypto investment product space. This coordinated rollout across multiple digital assets demonstrates Grayscale’s comprehensive approach to integrating staking functionality across its product suite.

Grayscale CEO Peter Mintzberg emphasized the significance of this development, stating: ‘Staking in our spot Ethereum and Solana funds is exactly the kind of first mover innovation Grayscale was built to deliver. As the #1 digital asset-focused ETF issuer in the world by AUM, we believe our trusted and scaled platform uniquely positions us to turn new opportunities like staking into tangible value potential for investors.’ This statement underscores the firm’s confidence in its ability to leverage its market position to create novel investment opportunities.

Grayscale will implement staking through institutionalized custodians and validator partners, adopting a passive staking approach that aims to secure protocols while supporting long-term network resilience. This operational model ensures that the staking process maintains the security and reliability standards expected by institutional investors while generating rewards for fund shareholders. The firm’s emphasis on using established institutional partners reflects its commitment to maintaining robust risk management practices.

Structurally, ETHE and ETH operate as exchange-traded products under the Securities Act of 1933 rather than the Investment Company Act of 1940, making them distinct from traditional ETFs. However, they follow the same legal framework used for spot Bitcoin ETFs that gained SEC approval earlier this year. Grayscale clarifies that while ‘ETHE and ETH hold digital assets; an investment in ETHE and ETH is not a direct investment in digital assets,’ highlighting the intermediary nature of these investment vehicles.

The distinction between ETPs and traditional ETFs becomes particularly relevant in the context of staking rewards distribution and regulatory oversight. Grayscale’s approach demonstrates how existing regulatory frameworks can accommodate innovative crypto investment features while maintaining compliance with securities laws. This structural innovation could pave the way for similar enhancements across the broader digital asset ETP ecosystem.

Grayscale’s staking announcement arrives as the industry awaits SEC approval for the first US-listed Ether staking ETFs, which could potentially unlock substantial institutional capital. Markus Thielen, head of research at 10x Research, highlighted the significance of such developments, stating: ‘This would mark a monumental structural shift in how institutional capital flows into Ethereum, unlocking a new era of yield-driven participation.’ This perspective underscores the transformative potential of staking-enabled crypto products.

The competitive landscape for staking-enabled crypto products is evolving rapidly. Three months prior to Grayscale’s announcement, the REX-Osprey Solana staking ETF debuted on the Cboe BZX Exchange, registering $33 million in trading volume and $12 million in inflows on its opening day. That fund operates under the Investment Company Act of 1940, which allows crypto ETFs to hold most assets directly and distribute staking rewards where applicable, creating a different structural approach to the same investment objective.

Grayscale’s simultaneous activation of staking across multiple products represents a strategic response to growing investor demand for yield-generating crypto exposure. By enabling staking across its Ethereum and Solana products, Grayscale can give investors exposure to what it describes as the ‘long-term value accrual of these networks, while maintaining the funds’ core objectives.’ This balanced approach addresses both income generation and capital appreciation considerations that are increasingly important to institutional allocators.