Grayscale Stakes $150 Million in Ethereum After Launching First US Staking ETPs

TLDR

• Grayscale staked 32,000 ETH worth $150 million after launching staking rewards for its Ethereum ETPs on October 6
• Grayscale became the first US crypto fund issuer to offer staking-based passive income through its ETHE and ETH products
• Despite the staking launch, Grayscale’s ETFs saw limited inflows under $20 million each on debut day
• BlackRock’s ETHA led inflows with $92 million and $2 billion in trading volume on the same day
• The SEC faces 16 crypto ETP application deadlines in October including two staking-enabled funds from 21Shares and BlackRock

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Grayscale staked 32,000 Ether tokens worth $150 million on October 7. The move came one day after the asset manager introduced staking capabilities for its exchange-traded products.

The company became the first US-based crypto fund issuer to offer staking rewards through its products. The staking applies to both the Grayscale Ethereum Trust and the Ethereum Mini Trust.

Blockchain data platform Lookonchain confirmed the transfer of the 32,000 ETH. The staked funds will generate passive income for shareholders through validator rewards.

Grayscale’s staking policy states that rewards will be treated as fund assets. Shareholders will receive up to 77% of staking rewards with the Ethereum Trust after sponsor and custodian fees. The Ethereum Mini Trust shareholders will earn about 94% of rewards based on its lower fee structure.

The two products handle rewards differently. ETHE will distribute staking returns as cash payments to investors. ETH will reinvest the rewards into its net asset value for compounding growth.

Both Grayscale products are registered under the Securities Act of 1933. This makes them exchange-traded products rather than traditional ETFs under the Investment Company Act of 1940.

Limited Debut Inflows for Grayscale

The staking launch did not drive strong investor interest on the first day. ETHE received $14.8 million in inflows while ETH brought in $18.7 million on October 6.

BlackRock’s iShares Ethereum Trust led the market with $92 million in inflows. The fund also recorded $2 billion in trading volume and gained 18,959 ETH.

Bitwise ETHW came in second with $27 million in inflows. Grayscale’s products ranked lowest among US Ethereum ETF issuers for the day.

Ethereum’s price rose 4% to trade above $4,700 following the staking news. Market observers expect further price gains ahead.

Ethereum (ETH) Price

SEC Faces Multiple ETP Deadlines

The Securities and Exchange Commission has 16 crypto ETP applications on its calendar for October. Two of these involve staking-enabled Ethereum funds.

21Shares filed for approval of its Core Ethereum ETF staking feature with a decision deadline of October 23. BlackRock submitted an amendment to add staking rewards to ETHA with an expected response date of October 30.

Rex-Osprey already launched a Solana staking ETF in July under the 1940 Act. Grayscale’s Solana Trust has enabled staking and awaits approval for uplisting to an ETP.

The ongoing government shutdown may delay regulatory decisions. The SEC announced it would operate with limited staff until Congress passes a funding bill. The Senate was set to reconvene on the funding matter after five failed votes.

Crypto ETPs saw record inflows of $5.95 billion last week. The surge followed the government shutdown as investors moved toward decentralized assets.

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