Crypto-focused asset manager Grayscale staked $150 million worth of Ether after introducing staking for its exchange-traded products (ETPS) on Monday.
The asset management company staked 32,000 Ether (ETH) worth $150 million, according to blockchain data platform Lookonchain.
The transfer occurred a day after Grayscale introduced staking for its Ether ETPs, making it the first US-based crypto fund issuer to offer staking-based passive income for its funds.
The move enables Grayscale’s ETP and its shareholders to start earning passive income via staking rewards on the $150 million. These staking rewards will be treated as “assets of the fund,” according to Grayscale’s ETP Staking Policy.
Deducting sponsor and custodian fees, the fund’s shareholders will earn up to 77% of the total generated staking rewards with Grayscale’s Ethereum Trust and about 94% with the Ethereum Mini Trust, based on the fee structures disclosed in the SEC filings.
Source: Lookonchain
Both Grayscale Ethereum Trust ETF (ETHE) and Grayscale Ethereum Mini Trust ETF (ETH) are exchange-traded products registered under the Securities Act of 1933, not the Investment Company Act of 1940, the latter being the regulatory framework used for traditional mutual funds.
This makes ETPs structurally different from ETFs governed by the 1940 Act.
Grayscale’s move marks the launch of the first staking ETP in the US. However, at least two additional Ether staking funds are expected to receive a response from the US Securities and Exchange Commission (SEC) in October.
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October is shaping up as a promising month for crypto, with 16 crypto ETP applications on the SEC’s calendar for the month.
Of the 16, at least two crypto staking funds are awaiting a decision during the month, including the 21Shares’ Core Ethereum ETF (TETH) staking filing scheduled for Oct. 23 and BlackRock’s iShares Ethereum Trust (ETHA) ETP amendment seeking to add staking rewards expected on Oct. 30.
21Shares’ Ether fund is registered under the Securities Act of 1933, which makes it an ETP, akin to Grayscale’s ETH and ETHE ETPs that launched yesterday.
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Meanwhile, the REX-Osprey Solana Staking ETF launched in July, as the first Solana (SOL) staking ETF under the Investment Company Act of 1940, which allows crypto ETFs to hold the majority of their spot assets directly and distribute staking rewards where applicable.
Grayscale’s Solana fund, the Grayscale Solana Trust (GSOL), has also enabled staking and is awaiting regulatory approval for uplisting to an ETP.
However, the ongoing government shutdown may slow down the regulatory response to crypto ETP applications, as the SEC said that it would operate “under modified conditions” with an “extremely limited number of staff” until a funding bill is passed.
With no clear resolution in sight, the Senate is set to reconvene on the funding bill later on Tuesday, after Republicans and Democrats failed to agree for the fifth time on Monday.
The government shutdown has also increased investor appetite for cryptocurrency funds and decentralized assets, driven by growing uncertainty.
Crypto ETP flows by asset as of Friday (in millions of US dollars). Source: CoinShares
Crypto ETPs saw their highest-ever inflows last week after the government shutdown, recording $5.95 billion worth of cumulative investments, Cointelegraph reported on Monday.
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