Several prominent companies, including Ark Investments Management and Fidelity Investments, have decided to remove staking from their plans for Ether (ETH) exchange-traded funds (ETFs) due to regulatory pressures from the United States Securities and Exchange Commission (SEC).
While this strategic shift may increase the likelihood of an Ether ETF approval, it has sparked concern and debate within the crypto industry. Staking, which involves locking up cryptocurrencies to validate transactions and earn rewards, is highly valued by many investors. The absence of staking in Ether ETFs could significantly impact their appeal compared to direct Ether purchases, as staking provides a source of yield.
Brian Rudick, a senior strategist at GSR, emphasized that holding Ether through an Ether ETF without staking would result in an “immediate opportunity cost.” Since Ether is built on the proof-of-stake (PoS) mechanism, the removal of staking from Ether ETFs could have broader implications for supply, network security, and decentralization, as there would be less staked ETH.
A member of the X community shared their opinion on the staking concerns, suggesting that Ether ETFs were asked to remove staking due to the price difference with Bitcoin (BTC). In response, another member likened staking to “earning interest on your savings” and viewed it as falling under the “securities umbrella.”
Amid the community’s differing perspectives on the changes to Ether ETF staking opportunities, the SEC has initiated discussions with potential issuers of spot Ether ETFs. A decision is expected within the next few hours. This news follows the recent passing of the Financial Innovation and Technology for the 21st Century Act, also known as the FIT21 crypto bill, in the U.S. House of Representatives. The bill received approval with 208 Republicans and 71 Democrats voting in favor, while 136 voted against.
In the midst of this development, the SEC finds itself facing a fierce battle against the legal firepower of the crypto industry, akin to the clash between Godzilla and Kong.