Spot ETH ETFs began trading on US exchanges on Tuesday, reaching nearly $1 billion in volume in the first two days. Today, the volume seems to be ending at similar levels. However, as expected, exits from Grayscale’s ETHE are strong. About 8% of total assets were sold in two days. However, something bigger for ETH ETF could exponentially increase interest in the future.
Spot Bitcoin ETF and Staking
The staking feature was in the application file, but the SEC requested its removal before approval. The SEC, seeing staking as a security feature, got what it wanted. Issuers had to remove it from the files. Before the SEC exerted this pressure, we were talking about staking-featured ETFs attracting massive investors from traditional markets by providing up to 5% additional annual earnings.
Despite this, we saw over $800 million in flows. Net inflows were negative at -$26.7 million due to yesterday’s exits. By not allowing the staking feature, which would violate securities laws, the SEC also prevented investors from earning up to an additional 5% annually.
Will the Staking Feature Arrive?
SEC management will change, and Gensler will resign before February 2025. If the new management is not as strict, this could change. Currently, Peirce and another member are complaining that their institution is overly negative towards cryptocurrencies. Maybe we will see an SEC with members like Peirce and Markus in the majority, and then all these issues will be resolved.
BlackRock digital assets head Rob Mitchnick says they are not discussing this topic currently and that the SEC has clearly expressed its view. However, Fidelity’s digital asset management head Cynthia Lo Bessette is more persistent on this issue.
“As an industry, we will work on how we can bring staking capabilities to investors in these products. Staking is a critical component of the Ethereum ecosystem because it is an activity that secures the ecosystem and is therefore an important part of the investment experience.”
ETF Store president Nate Geraci believes that even if the current management opposes it, it is only a matter of time.
Franklin’s ETF product and capital markets head David Mann said;
“I think whether this happens will depend heavily on the regulatory clarity we expect over time. This is the framework we are dealing with today, and if it evolves, we will be ready to evolve with it.”
