Nasdaq’s recent filing with the Securities and Exchange Commission (SEC) on July 16 has stirred up excitement in the world of cryptocurrency investing. The filing pertains to the addition of staking capabilities to BlackRock’s iShares Ethereum Trust (ETHA) exchange-traded fund (ETF).
If approved, this rule change would allow BlackRock to stake Ethereum (ETH) directly or through trusted staking providers. The firm would treat the rewards received from staking as income, and must hold the staked coins in arrangements that align with the SEC’s guidelines on protocol staking activities issued in May.
In a move to ensure compliance and minimize risks, BlackRock must obtain legal counsel opinion or guidance from the US government on the federal tax treatment of staking activities before proceeding. Additionally, in the case of slashing or forking events, BlackRock will not be responsible for absorbing any losses incurred.
Nasdaq has stated that this proposal aims to enable ETHA to capture returns while operating within specified constraints designed to safeguard shareholders and the market.
BlackRock is not the only player in the game looking to tap into the potential of staking Ethereum. Other issuers, such as Cboe, Fidelity, Franklin Templeton, Invesco Galaxy, and 21shares, have also sought regulatory approval for their US-based spot Ethereum products to earn protocol rewards. Bitwise and Grayscale are also in the queue, seeking approval to stake Ethereum held in their respective funds.
Bloomberg ETF analyst, James Seyffart, expressed optimism about this development, stating that it is long overdue. The regulatory process for these filings has set deadlines, with the first final deadline approaching in October. However, Seyffart believes that the approval process may not take as long as anticipated.
The surge in interest and investment in US-listed spot Ethereum ETFs is evident, with over $726 million in net inflows recorded across nine funds on July 16 alone. ETHA led the pack with $499.2 million in inflows, signaling a growing interest from institutional investors in Ethereum’s underlying technology, including its infrastructure for stablecoins and tokenized assets.
In conclusion, the push for staking capabilities in Ethereum-based ETFs reflects a growing trend in the cryptocurrency market, as investors seek new ways to capitalize on the potential of blockchain technology. The approval of these filings could open up exciting opportunities for investors looking to diversify their portfolios and tap into the growing ecosystem of decentralized finance.