The approval of Ethereum spot ETFs in July marked a pivotal milestone for the broader crypto ecosystem, positioning ETH as the second major digital asset—after Bitcoin—to gain formal access to traditional financial markets through exchange-traded products. While this regulatory green light was widely celebrated, the initial market response has been lukewarm compared to the explosive enthusiasm seen with Bitcoin ETFs.
Several factors have contributed to this tepid reception. First, Ethereum’s narrative as a programmable, utility-driven blockchain contrasts sharply with Bitcoin’s “digital gold” positioning, making it less intuitive for risk-averse institutional investors. Second, ongoing selling pressure from Grayscale’s ETHE fund has weighed on price momentum. Most critically, the current ban on staking within U.S.-listed Ethereum spot ETFs has significantly dulled their appeal—especially when investors can earn yield by directly staking ETH or using liquid staking derivatives.
Currently, investors holding ETH via ETFs miss out on staking rewards, which hover around 3.5% annual yield, while still paying management fees ranging from 0.15% to 2.5%. For yield-conscious investors, this trade-off is hard to justify—prompting many to seek alternative exposure or delay investment altogether.
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However, a shift may be on the horizon. With changing political dynamics following the 2024 U.S. election and growing expectations for a more crypto-friendly regulatory environment, market sentiment is increasingly bullish on the prospect of staking-enabled Ethereum ETFs. This potential upgrade could dramatically enhance the value proposition of these financial products—and send ripple effects across the crypto market.
Key Developments Pointing Toward Staking Integration
Recent developments suggest that staking functionality for Ethereum ETFs is moving from speculation to possibility:
- On November 13, Bitwise, one of the leading ETF issuers, acquired Attestant, a prominent Ethereum staking infrastructure provider. CEO Hunter Horsley revealed that one in five Bitwise clients already expresses interest in staking—and expects that number to grow significantly in the coming years.
- Just a week later, on November 20, Europe-based ETP issuer 21Shares AG launched a staking-enabled version of its Ethereum product, rebranded as the “Ethereum Core Staking ETP” (ETHC). The product is now live on major European exchanges including SIX Swiss Exchange, Xetra, and Euronext Amsterdam.
- Then came a pivotal moment: on November 22, SEC Chair Gary Gensler, long viewed as a hardliner on crypto regulation, announced he would step down on January 20, 2025. His departure has amplified expectations that the SEC may soften its stance on staking—potentially clearing the path for U.S. ETF providers to integrate yield-generating features.
These signals collectively point to a growing momentum behind staking-enabled Ethereum investment products, which could soon become a standard offering rather than a niche differentiator.
Which Crypto Assets Could Benefit?
1. Ethereum (ETH) – The Primary Beneficiary
The most direct winner would be Ethereum itself. Allowing ETF investors to earn staking rewards would make ETH exposure more attractive, especially for conservative or yield-seeking capital. This could drive increased demand for ETH, tighten circulating supply (as more tokens are locked up in staking), and strengthen long-term price fundamentals.
In fact, ETH’s recent outperformance relative to BTC may already reflect early positioning ahead of this potential shift.
2. Liquid Staking Tokens (LSTs) – LDO, RPL, ANKR, FXS
While ETFs may not directly adopt decentralized LSTs like stETH or rETH, sentiment toward the broader liquid staking sector is improving.
Notably:
- Lido (LDO) and Rocket Pool (RPL) faced legal uncertainty earlier this year when the SEC filed lawsuits alleging their staked ETH tokens constitute unregistered securities. However, with Gensler’s exit and a likely regulatory reset, these cases may be resolved more favorably—reducing overhang risk.
- Both tokens have broken out of prolonged consolidation phases, signaling renewed investor confidence.
- Projects like Ankr (ANKR) and Frax Ether (sfrxETH/FXS) are also seeing renewed attention due to their roles in decentralized staking infrastructure.
3. Restaking Ecosystem – EIGEN, ETHFI, REZ, PUFFER
Even more intriguing is the rebound in the restaking sector, led by EigenLayer (EIGEN). Despite hitting an all-time low recently, EIGEN has staged a strong recovery—holding above the critical $3 mark even during broad market corrections.
As the foundational protocol enabling restaking of ETH across multiple applications, EigenLayer’s health is vital to the entire ecosystem. Its recovery could pave the way for stronger performance from affiliated projects such as:
- ether.fi (ETHFI)
- Renzo (REZ)
- Puffer (PUFFER)
These platforms offer liquid restaking tokens (LRTs) that allow users to earn additional yield beyond base staking rewards—an attractive feature that could align well with future ETF strategies if integrated.
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4. Custodial & Infrastructure Providers – Coinbase (COIN)
Beyond native crypto tokens, traditional financial players with deep crypto integration stand to benefit. Coinbase (COIN), already a key custodian for both Bitcoin and Ethereum spot ETFs, offers its own liquid staking token (cbETH) and operates one of the largest regulated staking networks.
While there's no confirmation yet, it's reasonable to expect that ETF issuers—especially those avoiding third-party dependencies—might partner with trusted custodians like Coinbase to offer compliant staking solutions.
Market Reaction: Sentiment vs. Substance
It’s important to acknowledge that much of the recent rally in staking and restaking assets remains emotionally driven rather than grounded in immediate business integration.
Even if staking becomes available in U.S. Ethereum ETFs, it’s unlikely that funds will adopt decentralized LSTs like stETH or eETH directly. Instead:
- Some issuers may build in-house staking infrastructure (like Bitwise with Attestant).
- Others may rely on centralized providers like Coinbase or regulated intermediaries.
Therefore, while LDO, RPL, EIGEN, and others may not see direct inflows from ETFs, they benefit from rising ecosystem optimism—a powerful catalyst in bull markets.
After years of regulatory pressure and market stagnation, renewed hope for innovation within Ethereum’s staking layer is itself a win.
Frequently Asked Questions (FAQ)
Q: Can U.S.-based Ethereum spot ETFs currently offer staking rewards?
A: No. The SEC has not approved staking functionality for Ethereum spot ETFs in the U.S., meaning investors miss out on yield while paying management fees.
Q: Will ETH price rise if staking is added to ETFs?
A: Likely yes. Staking inclusion would improve ETF competitiveness, attract yield-focused investors, reduce liquid supply, and strengthen ETH’s long-term value proposition.
Q: Are Lido (LDO) and Rocket Pool (RPL) safe investments after the SEC lawsuits?
A: Legal risk remains, but with Gensler stepping down and a potential regulatory shift, the outlook is improving. These projects are central to Ethereum’s staking infrastructure and could benefit from broader adoption.
Q: What is restaking, and why does EigenLayer matter?
A: Restaking allows users to reuse their staked ETH to secure additional networks or applications. EigenLayer is the leading protocol enabling this, making it foundational to next-gen DeFi innovation.
Q: Could ETFs use tokens like stETH or cbETH in their portfolios?
A: Possible but unlikely in the short term. Regulators prefer transparency and control—so most ETFs would likely use proprietary or custodial staking solutions rather than third-party LSTs.
Q: Is now a good time to invest in staking-related crypto assets?
A: With improving sentiment and structural developments underway, the risk-reward profile has improved—especially for established protocols like Lido, Rocket Pool, and EigenLayer. However, always conduct due diligence and consider macro conditions.
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