Grayscale adds staking to Ethereum ETFs, offering up to 7% yields for U.S. investors

In a landmark development for digital asset investing, Grayscale Investments has introduced staking capabilities across select Grayscale spot crypto ETPs, making it the first U.S.-based crypto asset manager to offer staking-based yield within exchange-traded products.

Announced on Monday, the firm confirmed that staking will initially apply to its Grayscale Ethereum Mini Trust ETF (ETH) and Grayscale Ethereum Trust ETF (ETHE). Both are now the first U.S.-listed spot crypto ETPs to enable staking rewards for investors. Grayscale also revealed plans to integrate staking into its Grayscale Solana Trust (GSOL), pending regulatory approval for its transition into a listed ETP.

Staking in our spot Ethereum and Solana funds is exactly the kind of first-mover innovation Grayscale was built to deliver,’ Peter Mintzberg, CEO of Grayscale Investments, said in an official press release. “As the #1 digital asset-focused ETF issuer in the world by AUM, our trusted and scaled platform uniquely positions us to turn new opportunities like staking into tangible value potential for investors.”

How Staking Works in Grayscale’s ETPs

In proof-of-stake networks like Ethereum and Solana, validators lock up tokens as collateral to process transactions and secure the blockchain. In return, they earn newly minted tokens as rewards—similar to interest earned on bank deposits.

Grayscale’s ETPs will stake their underlying Ethereum and Solana holdings with third-party validators, then distribute the rewards (minus fees) to ETP shareholders. The company has not yet disclosed which validators it will partner with, what percentage of rewards will be retained as fees, or how frequently rewards will be distributed to investors.

Staking yields for Ethereum currently average 3.4% annually, while Solana offers approximately 7%, according to data from Staking Rewards. However, actual yields can fluctuate based on network activity, validator performance, and the number of tokens staked across the network.

How staking changes the landscape for Grayscale spot crypto ETPs

The addition of staking to Grayscale spot crypto ETPs represents a pivotal shift in how institutional and retail investors can earn yield from blockchain participation without managing tokens directly. Staking allows investors to support network validation processes such as on Ethereum and Solana in exchange for periodic rewards, typically paid out in native crypto assets.

According to Grayscale, this feature allows ETP holders to benefit from the “long-term value accrual” of proof-of-stake (PoS) networks while maintaining the core regulatory safeguards and transparency of an exchange-traded product.

By enabling staking across Ethereum and Solana-based products, we’re offering investors a way to capture network-level yield alongside price appreciation, the company said in its statement.

Industry analysts see this as a natural next step following the approval of spot Bitcoin ETFs in the U.S. earlier this year. The introduction of staking to Grayscale spot crypto ETPs signals the next evolution of crypto ETFs from passive exposure to active network participation, Matthew Sigel, Head of Digital Assets Research at VanEck, said in commentary to Bloomberg.

Expanding access while navigating regulation

Both ETHE and ETH are registered under the Investment Company Act of 1940, but they are structured differently from most exchange-traded funds. Grayscale clarified that these products hold digital assets directly, but “an investment in ETHE and ETH is not a direct investment in digital assets,” meaning investors gain exposure to crypto price movements and staking yields without directly owning tokens or managing wallets.

Meanwhile, the Grayscale Solana Trust (GSOL) has also activated staking functions internally but awaits regulatory clearance for uplisting to a public ETP. If approved, GSOL would become the first Solana-based spot ETP in the U.S. to offer staking rewards.

Grayscale spot crypto ETPs have consistently pushed regulatory boundaries responsibly, said Eric Balchunas, ETF analyst at Bloomberg Intelligence. This move could prompt competing issuers like BlackRock and Fidelity to consider similar staking integrations once the SEC clarifies its position on yield-bearing ETPs.

Despite ongoing regulatory scrutiny of staking particularly from the U.S. Securities and Exchange Commission (SEC), which previously targeted Kraken for its staking services, Grayscale insists its framework operates fully within legal boundaries.

Staking’s potential to reshape ETF competition

The integration of staking into Grayscale spot crypto ETPs could set a precedent for the broader digital asset management industry. Analysts say it bridges the gap between traditional income-generating instruments like bonds or dividend-paying stocks and crypto-based yield opportunities.

According to CoinDesk, staking yields for Ethereum currently average around 3.4% annually, while Solana offers up to 7%, depending on validator performance and network conditions. By channeling those rewards into a regulated product, Grayscale is effectively turning blockchain participation into a compliant, institutional-grade yield source.

This is a pivotal moment for investor access, said Katie Talati, Head of Research at Arca, in a note shared with The Block. Staking through Grayscale spot crypto ETPs removes the technical barriers of running validator nodes while maintaining transparency and liquidity are two things the crypto-native ecosystem often struggles with.

Market observers expect competitors to follow suit if Grayscale’s staking rollout gains traction. The potential to offer passive income via staking rewards could make crypto ETPs more appealing to traditional investors seeking yield in a low-interest environment.

What it means for investors

The staking feature could help Grayscale regain market share lost to competitors since the January 2024 approval of spot Bitcoin ETFs. According to Bloomberg Intelligence data, Grayscale’s GBTC has seen over $20 billion in net outflows as investors migrated to lower-fee products from BlackRock and Fidelity.

By offering unique features like staking that competitors lack, Grayscale may be able to justify its higher fee structure. ETHE currently charges a 2.5% management fee compared to BlackRock’s ETHA at 0.25%, but the addition of staking yields could narrow the effective cost difference for investors.