The New York Stock Exchange (NYSE) has filed a proposal with the US Securities and Exchange Commission (SEC) on behalf of asset manager Grayscale Investments, seeking approval to introduce Ethereum staking within its spot Ethereum exchange-traded funds (ETFs). 

If approved, the Grayscale Ethereum Trust ETF (ETHE) and the Grayscale Ethereum Mini Trust ETF (ETH) would have the ability to stake Ether (ETH) and earn staking rewards, which would be classified as income for the funds.

The proposal, submitted under NYSE Arca Rule 8.201-E, aims to allow Grayscale to stake a portion of the Ethereum held in its funds through trusted staking providers. 

According to the filing, Grayscale emphasized that staking will not involve any delegated staking services and will not promise investors any fixed return. Instead, the initiative seeks to improve fund performance by leveraging staking rewards while keeping sufficient liquidity to meet investor redemptions.

Ethereum staking, which became possible following the network’s shift to a proof-of-stake consensus model, involves locking up ETH in validator nodes to secure the network and earn yield in return. Staking rewards are issued in newly minted ETH, creating an additional revenue stream for entities participating in the process.

The move by Grayscale follows a broader trend of institutional adoption of Ethereum staking. While some cryptocurrency platforms have faced scrutiny from the SEC over their staking services, Grayscale argues that this proposal differs from the "staking-as-a-service" models targeted by regulators. The firm asserts that its staking activities will solely involve ETH held by the trust and will not include pooled staking from external investors.

Grayscale’s proposal is one of several recent efforts by asset managers to expand the scope of crypto-based ETFs in the US market. While the SEC has yet to approve a spot Ethereum ETF, the latest filing signals increasing institutional interest in ETH staking as a way to generate additional yield for investors.