Grayscale Invests $150 Million in Ethereum Ahead of SEC ETF Deadlines

Grayscale, a prominent crypto asset manager, has staked $150 million in Ether (ETH) following the introduction of staking rewards for its exchange-traded products (ETPs) on Monday. The company has allocated 32,000 ETH to this investment, as reported by blockchain data platform Lookonchain.

This staking initiative took place just a day after Grayscale began offering staking for its Ether ETPs, making it the first crypto fund issuer in the US to provide staking rewards for its products.

This strategic move allows Grayscale’s ETPs and their shareholders to generate passive income through staking rewards on the substantial investment. According to Grayscale’s ETP Staking Policy, these staking rewards will be classified as “assets of the fund.”

Shareholders can expect to receive up to 77% of the total staking rewards generated, after accounting for fees associated with management and custody. For Grayscale’s Ethereum Trust, the expected share is approximately 94% based on the outlined fee structure in filings with the SEC.

Source: Lookonchain

Both Grayscale’s Ethereum Trust ETF (ETHE) and its Ethereum Mini Trust ETF (ETH) are products registered under the Securities Act of 1933, differentiating them structurally from traditional mutual funds.

This launch signifies the introduction of the very first staking ETP in the United States. Additionally, two other Ether staking funds are expected to respond to SEC queries in October.

SEC Faces Deadlines on 16 Altcoin ETPs in October

As October unfolds, it is anticipated to be a significant month for cryptocurrencies, featuring 16 crypto ETP applications that have been scheduled for review by the SEC. This includes forthcoming decisions for at least two crypto staking funds within this month, notably a filing by 21Shares for its Ethereum ETF (TETH) scheduled for October 23, and an amendment by BlackRock for its iShares Ethereum Trust (ETHA) intended to incorporate staking rewards, expected by October 30.

21Shares’ Ethereum fund falls under the Securities Act of 1933, categorizing it as an ETP, similar to Grayscale’s ETP offerings which were launched yesterday.

Simultaneously, the REX-Osprey Solana Staking ETF, which debuted in July, became the first of its kind to operate under the Investment Company Act of 1940, permitting crypto ETFs to possess most of their assets directly and distribute rewards from staking as needed.

Grayscale’s Solana fund, known as the Grayscale Solana Trust (GSOL), has also enabled staking and is currently awaiting regulatory approval for conversion into an ETP.

Nonetheless, the ongoing government shutdown might delay the SEC’s response to applications regarding crypto ETPs, as they are functioning “under modified conditions” with severely reduced staffing until a funding bill is finalized.

With no immediate resolution available, the Senate is scheduled to reconvene later on Tuesday to negotiate the funding bill, following an unsuccessful attempt by both Republicans and Democrats to reach agreement.

This government shutdown has inadvertently elevated interest in cryptocurrency investments and decentralized assets, fueled by growing uncertainty in traditional financial markets.

Last week saw an unprecedented influx into crypto ETPs, with reported cumulative investments reaching $5.95 billion amidst the shutdown concerns.