Cboe Seeks SEC Approval to Implement Staking for 21Shares Ethereum ETF
The cryptocurrency investment landscape is poised for a potential breakthrough as Cboe BZX Exchange seeks approval from the U.S. Securities and Exchange Commission (SEC) to introduce staking for the 21Shares Core Ethereum ETF. This move, if approved, could redefine how institutional investors gain exposure to Ethereum (ETH) staking rewards while maintaining regulatory compliance.
Why This Matters
Staking is a fundamental component of Ethereum’s proof-of-stake (PoS) consensus mechanism, enabling participants to lock up ETH to validate transactions and earn rewards. While several Ethereum ETFs gained approval in 2024, the SEC strictly prohibited staking due to concerns that it might constitute an unregistered securities offering—a stance that previously led to enforcement actions against Coinbase and Kraken.
However, Cboe’s latest proposal introduces a new staking method—referred to as “point-and-click staking.” Unlike traditional staking, where ETH is transferred to third parties, this approach allows the ETF to stake ETH directly from its custody wallet, mitigating risks of theft while maintaining regulatory oversight.
Regulatory Hurdles & Cboe’s Strategy
The SEC’s hesitancy around staking in ETFs stems from concerns over investor protection and compliance with federal securities laws. To address these issues, Cboe has highlighted key safeguards:
No third-party involvement: The ETH remains in the fund’s custody while earning rewards.
Lower risk of security breaches: Since assets aren’t moved externally, threats like hacking or mismanagement are minimized.
Slashing risks remain: If the network penalizes validators for rule violations, a portion of staked ETH could be forfeited.
Cboe also argues that prohibiting staking in Ethereum ETFs is akin to an equity ETF refusing dividend payouts, which could limit investor benefits and ETF performance tracking.
Will the SEC Approve Staking for Ethereum ETFs?
This filing marks the first instance of a U.S.-listed crypto ETF requesting staking privileges. If approved, it could set a precedent for future crypto ETFs seeking to integrate staking rewards.
With regulatory sentiment evolving, optimism has grown among industry experts. SEC Commissioner Hester Peirce, a well-known advocate for crypto innovation, has suggested that the conversation around Ethereum ETF staking remains open.
According to Bloomberg ETF analyst James Seyffart, if the SEC formally acknowledges the filing, a decision could arrive by October. If successful, this move could revolutionize regulated Ethereum investment products, offering new opportunities for institutional and retail investors alike.
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