Cboe Seeks to Introduce Staking in 21Shares ETH-ETF
Date: 2025-02-14 Author: Oliver Abernathy Categories: BUSINESS
Cboe BZX has proposed to the U.S. Securities and Exchange Commission (SEC) to revise its rules to allow staking in the 21Shares Core Ethereum ETF. Until now, U.S. ETH-ETFs have avoided staking because of regulatory concerns about whether such transactions are classified as securities investments, as well as the difficulty of monitoring returns in a regulated environment.
Adding staking could make the ETF more attractive to investors, as it will provide additional yield, thereby bridging the gap between traditional ETH purchases and the benefits of an ETF.
The SEC has previously approved a number of ETH-ETFs, but without staking. Last year, the 21Shares Core Ethereum ETF was approved, as well as trusts from major asset managers like BlackRock and Fidelity. If Cboe’s new proposal is approved, it could set a precedent for other crypto ETFs to incorporate similar features, making them more competitive.
Staking involves locking up crypto assets to power the Ethereum network, with participants receiving rewards for maintaining the security of the blockchain. However, the SEC is cautious because staking may fall under the Howey test, which states that an investment is classified as a security if it involves an investment in a common enterprise and is intended to generate profits from the efforts of a third party.
Meanwhile, another market participant, NYSE Arca, acting on behalf of Grayscale, previously filed a 19b-4 with the SEC to create an exchange-traded fund focused on Cardano.
