Grayscale Invests $150M in ETH as Industry Anticipates ETP Staking Approval

Grayscale, an asset manager focused on cryptocurrency, has staked $150 million in Ether after launching staking for its exchange-traded products (ETPs) on Monday.

The company staked 32,000 Ether (ETH) valued at $150 million, according to blockchain data firm Lookonchain.

This transfer took place a day after Grayscale initiated staking for its Ether ETPs, becoming the first US-based issuer of cryptocurrency funds to provide staking-based passive income for its offerings.

The initiative allows both Grayscale’s ETP and its shareholders to begin accumulating passive income through staking rewards on the $150 million. According to Grayscale’s ETP Staking Policy, these rewards will be regarded as “assets of the fund.”

After deducting sponsor and custodian fees, shareholders of the fund will receive up to 77% of the total staking rewards generated through Grayscale’s Ethereum Trust, and about 94% via the Ethereum Mini Trust, based on fee structures outlined in SEC filings.

Grayscale’s 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, which is the regulatory structure applicable to traditional mutual funds.

This makes ETPs structurally distinct from ETFs governed by the 1940 Act.

Grayscale’s initiative signifies the debut of the first staking ETP in the US. Nevertheless, at least two more Ether staking funds are anticipated to receive feedback from the US Securities and Exchange Commission (SEC) in October.

Related: Korean retail capital driving Ether price, treasury demand: Samson Mow

SEC faces deadlines on 16 altcoin ETPs in October

October is emerging as a promising month for cryptocurrency, with 16 crypto ETP submissions on the SEC’s agenda for the month.

Among these, at least two crypto staking funds are expecting a ruling this month, including 21Shares’ Core Ethereum ETF (TETH) staking application due on Oct. 23 and BlackRock’s iShares Ethereum Trust (ETHA) ETP amendment seeking to incorporate staking rewards anticipated on Oct. 30.

21Shares’ Ether fund is registered under the Securities Act of 1933, categorizing it as an ETP, similar to Grayscale’s ETH and ETHE ETPs that launched yesterday.

Related: Aging boomers and global wealth seen boosting crypto until 2100

Meanwhile, the REX-Osprey Solana Staking ETF was launched in July, being the first Solana (SOL) staking ETF under the Investment Company Act of 1940, which permits crypto ETFs to directly hold most of their spot assets and distribute staking rewards where applicable.

Grayscale’s Solana fund, the Grayscale Solana Trust (GSOL), has also initiated staking and is awaiting regulatory approval to transition to an ETP.

Nonetheless, the current government shutdown may delay the regulatory responses to crypto ETP applications, as the SEC indicated it would operate “under modified conditions” with “an extremely limited number of staff” until a funding bill is enacted.

With no clear resolution currently, the Senate is scheduled to reconvene on the funding bill later on Tuesday, following failed negotiations between Republicans and Democrats for the fifth time on Monday.

The government shutdown has also spurred increased investor interest in cryptocurrency funds and decentralized assets due to rising uncertainty.

Crypto ETPs experienced their highest historical inflows last week following the government shutdown, recording $5.95 billion in total investments, according to Cointelegraph’s report on Monday.