SEC Extends Grayscale Review, Holding Back Approval of ETH Staking Amendments
Kevin Helms
SEC Extends Grayscale Review, Holding Back Approval of ETH Staking Amendments
The SEC just hit pause on a game-changing move that could supercharge ether ETFs with staking rewards and reshape crypto investing.
SEC Extends Grayscale Review, Holding Back Approval of ETH Staking Amendments
SEC Delays Verdict on Grayscale’s Ether Staking ETF as June Countdown Begins
The U.S. Securities and Exchange Commission (SEC) has extended its review period for a proposed rule change tied to the Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF, according to an official notice dated April 14. NYSE Arca, Inc. initially submitted the rule change on Feb. 14, aiming to amend current rules to permit ether staking within the trusts. The SEC now has until June 1, 2025, to determine whether to approve, reject, or further evaluate the proposal. The rule change was made public in the Federal Register on March 3, 2025, but no public comments have been received since its release.
The Commission stated its rationale for delaying the decision:
The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.
This move falls under the authority granted by Section 19(b)(2) of the Securities Exchange Act of 1934, which permits the SEC to extend its decision-making period to ensure thorough examination of the matters at hand. The 45-day window from the notice’s publication would have ended April 17, prompting the Commission to formally act to prolong the timeline.
If approved, the amendment would signal a shift in ether-related investment products by introducing staking. While this could increase yields for shareholders, it raises additional regulatory and operational issues.
So far, the SEC has taken a cautious stance on crypto staking, differentiating between centralized and decentralized models. In February 2023, it charged Kraken with offering unregistered securities through its staking service, resulting in a $30 million settlement and the end of its U.S. staking operations. Coinbase faced similar charges, but the SEC dropped the case in February without penalties or mandated changes. As of March, the SEC stated that proof-of-stake activity does not inherently violate federal securities laws, suggesting a more favorable view of decentralized staking. This perspective reflects ongoing efforts by a task force led by Commissioner Hester Peirce to create a clearer regulatory framework for crypto assets. The SEC approved several spot ether ETFs last year but barred them from staking due to investor protection concerns. However, proposals from exchanges including NYSE Arca and Cboe BZX to allow staking in ether ETFs remain under review, with key issues including how staking rewards are classified, slashing risks, and liquidity limitations during unstaking.
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