SEC Delays Staking in Ethereum ETF
Introduction
On June 30, 2025, the U.S. Securities and Exchange Commission announced it would postpone its decision on allowing staking within Bitwise’s proposed Ethereum spot ETF. This move underscores the regulator’s prudence in balancing innovation in digital-asset products with investor protection and market integrity.
Regulatory Context
The SEC’s hesitation reflects broader concerns over how staking—locking up crypto to support network operations—might introduce operational complexities into an ETF wrapper. Staking rewards depend on network participation and uptime, which can vary with protocol upgrades, network congestion, or technical failures. By opening a new review, the SEC aims to fully understand potential custody, disclosure, and valuation challenges before approving such a feature.
Bitwise’s Staking Proposal
Bitwise argued that integrating staking would allow ETF holders to earn yield on top of price exposure to Ethereum, positioning the product as more competitive against yield-generating DeFi wrappers. The firm detailed plans for a fully insured and independently audited staking service, emphasizing robust controls to minimize slashing risks and conflicts of interest between Bitwise and staking service operators.
Public Consultation Process
As part of its fresh review, the SEC is inviting public comment on the staking plan. Market participants, institutional investors, and service providers can submit feedback on risk factors such as market manipulation, cybersecurity vulnerabilities, custody arrangements, and disclosure clarity. This consultation period will inform the agency’s analysis and could extend the timeline for a final decision by several weeks.
Potential Market Implications
If approved, staking in an ETF could set a new industry standard, prompting other issuers to propose yield-enhanced crypto products under regulated frameworks. Such a precedent may accelerate the development of similar ETFs for other proof-of-stake blockchains. Conversely, continued delays or a rejection could signal stricter regulatory scrutiny over any yield-bearing features in digital-asset ETFs, slowing product innovation.
What This Means for Investors
Until the SEC reaches a final ruling, Bitwise’s Ethereum ETF will operate solely as a non-staking spot vehicle, offering direct exposure to ETH price movements without additional yield. Investors eager for staking rewards will need to continue accessing decentralized platforms or centralized custodians. Approval may open more accessible staking channels within brokerage accounts, but also introduce ETF-specific fees and operational considerations.
Next Steps and Timeline
The SEC’s public comment window will remain open for several weeks, after which the agency will compile feedback and conduct internal analyses. A final order on staking integration could arrive by late summer 2025. Market observers will closely watch any guidance published alongside the decision, as it may outline best practices for managing on-chain activities within regulated investment vehicles.