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May 22, 2024

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In a flurry of activity ahead of the anticipated decision on spot Ether exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC), major asset managers BlackRock, Grayscale, and Bitwise have all filed amended 19b-4 forms, removing provisions for staking Ether.

“Neither the Trust, nor the Sponsor, nor the Ether Custodian [...] nor any other person associated with the Trust will, directly or indirectly, engage in action where any portion of the Trust’s ETH becomes subject to the Ethereum proof-of-stake validation or is used to earn additional ETH or generate income or other earnings,” said the revised May 22 BlackRock filing from the Nasdaq Stock Market.

Meanwhile, similar amendments were filed by Grayscale and Bitwise with the New York Stock Exchange Arca.

These amendments follow similar moves by other asset managers, including Fidelity, VanEck, Franklin Templeton, Invesco Galaxy, and ARK 21Shares, signaling a concerted effort to address potential regulatory concerns surrounding staking.

Staking, the process of locking cryptocurrencies to support blockchain operations in exchange for rewards, has been a point of contention for regulators. By removing staking provisions, these asset managers aim to streamline their ETF applications and increase the likelihood of approval.

The SEC’s decision, expected by May 23, is being closely watched by the crypto community and could significantly impact the future of Ether ETFs in the United States. While the removal of staking provisions is seen as a positive step, the final outcome remains uncertain.

Market analysts have noted a shift in sentiment towards the possibility of approval, with Bloomberg analysts Eric Balchunas and James Seyffart even suggesting a 75% chance of a positive outcome. The Depository Trust and Clearing Corporation (DTCC) listing VanEck’s Ether ETF under the ticker symbol ETHV has further fueled optimism.

Elsewhere, the US House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21) on May 22. The legislation seeks to establish clearer crypto regulations in the country. The House passes the crypto baton to the Senate, where if signed into law, will define the roles of the the Commodity Futures Trading Commission (CFTC) and the SEC in the digital asset industry.