The recent clarification from the U.S. Securities and Exchange Commission (SEC) regarding staking activities has cleared a major legal obstacle for U.S. spot ETH ETF staking. The Division of Corporation Finance stated that certain staking activities are not considered security transactions, providing a much-needed clarity for firms offering staking services. Commissioner Hester Pierce welcomed this directive, emphasizing its significance for stakers and staking service providers in the United States.
This development signifies a significant shift from the previous regime, as PoS systems like Ethereum, Solana, and Cardano are now recognized as non-securities. This also extends to self and custodial staking, including liquid staking, as highlighted by Jito Labs’ legal officer, Rebecca Rettig. With this new guidance, the path seems clearer for the approval of U.S. spot ETH ETF staking, pending clarification from the IRS on how staking revenue will be handled in grantor trusts.
In the second quarter, ETH staking witnessed a surge in interest, with the total ETH staked increasing from 33 million to over 34 million, offering an average annualized return of 3%. If approved, ETF investors could benefit from these staking rewards without the complexities and risks associated with individual staking. This could potentially boost demand for ETH ETFs, especially considering that most ETH ETF holders are currently experiencing losses, as reported by Glassnode.
Despite the positive regulatory developments, the price of ETH has not seen a significant uptick. Spot market demand for the altcoin has declined, while open interest remains high, indicating speculative interest and market leverage. This situation could pose challenges for a sustained rally in the absence of improved market demand.
At the time of writing, ETH is trading at $2.62K, consolidating within the range of $2.3K and $2.7K throughout May. The market conditions suggest a cautious approach, as the high leverage could increase liquidation risks in the absence of a substantial uptrend. Stay tuned for further updates on ETH and the evolving regulatory landscape in the cryptocurrency market. The Benefits of Regular Exercise
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