A groundbreaking proposal for a U.S.-based Ethereum Exchange-Traded Fund (ETF) is making waves in the crypto space. Submitted on Form 19b-4, the request seeks approval to introduce direct staking within the 21Shares Core Ethereum ETF. If approved, this move would allow investors to earn staking rewards directly from the fund—a benefit currently unavailable in existing Ethereum ETFs.
Ethereum (ETH) has seen a notable increase in value amidst market fluctuations, with ETH currently trading at $2,681, reflecting a 2.11% rise in the last 24 hours. The proposal could further fuel this positive sentiment, as it introduces a new layer of potential earnings for investors.
Key Proposal Details and Staking Mechanics
The proposed amendments suggest incorporating a staking mechanism that would enable the ETF to stake a portion of its ETH holdings through trusted staking providers, including the custodian and its affiliates. However, the sponsor’s affiliates would not directly participate in staking activities.
In return, the ETF would receive staking rewards in ETH, potentially classified as income. However, key conditions are outlined to maintain transparency and fairness: the trust’s ETH cannot be pooled with assets from other entities, except at the staking provider level.
The filing also places restrictions on the sponsor, prohibiting the advertisement of staking services or guarantees of specific returns. Furthermore, the Ethereum held in the trust will remain within custodial wallets during staking, minimizing the risk of theft, though slashing remains a possibility. Importantly, the sponsor will not absorb or cover these risks.
SEC Review and Market Impact
The filing has been submitted to the SEC, which will review the proposed changes under the Securities Exchange Act, aiming to ensure market integrity and investor protection. The decision is expected by late October, although past filings have often been addressed near the deadline.
Also Read: Ethereum’s 5.23% Surge: Smart Money Drives Rally – Will ETH Break Through $2.5K or Face a Pullback?
Should the proposal be approved, it could revolutionize how Ethereum ETFs operate, adding a layer of staking rewards and potentially improving market efficiency, making it an exciting development for investors and the broader crypto community.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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