Key takeaways
Grayscale has connected traditional finance with decentralized cryptocurrency through the launch of the first publicly traded staking investment vehicle.
Its staking-enabled ETPs enable investors to earn blockchain rewards without the need for running validator nodes or grappling with complex technical and custody risks.
Grayscale’s Ether and Solana ETPs are the first in the US to combine spot crypto exposure with staking rewards, distributing yields either through the fund’s NAV or direct payouts.
These products encounter operational challenges, including validator performance issues and liquidity constraints, as well as regulatory and centralization risks linked to institutional staking.
Historically, Wall Street and the crypto realm have functioned in separate domains. Wall Street was characterized by traditional finance and defined regulatory norms, while the crypto industry grew around decentralized systems and evolving regulations. This gap is closing with the debut of the first publicly traded investment vehicle focused on staking cryptocurrencies.
Launched by Grayscale Investments, a leading digital asset manager, this staking-enabled exchange-traded product (ETP) represents a pivotal moment in crypto’s evolution and its integration into traditional finance. It’s not merely a fund; it’s a bridge offering traditional investors a regulated route to engage with the growth potential of crypto staking.
This article explores what crypto staking entails, barriers to greater institutional participation, and how Grayscale has fostered the institutionalization of crypto investment. It further discusses the regulatory and market transformations surrounding staking and clarifies how Grayscale’s spot crypto ETPs yield staking returns for investors. Finally, it outlines the associated risks with staking funds and illustrates how Grayscale’s ETPs have transitioned crypto from a price-tracking asset to a revenue-generating one.
Crypto staking and institutional barriers
Crypto staking encompasses committing digital assets like Ether (ETH) or Solana (SOL) to secure and validate transactions on proof-of-stake (PoS) blockchains. Participants earn rewards in return — akin to earning interest — for sustaining network operations.
Contrary to Bitcoin’s proof-of-work (PoW) system, which relies on energy-intensive mining, PoS systems function differently. They are built on staked capital and validator performance rather than computational power. This design makes them significantly more energy-efficient and accessible to a broader range of participants.
Broadly, both retail and institutional investors persist in focusing on purchasing and holding tokens for price appreciation over staking them. Operating validator nodes necessitates considerable capital, technical expertise, and consistent uptime. It also subjects participants to risks such as slashing penalties and custody issues. Additionally, in many regions, the regulatory status of staking rewards remains ambiguous.
Did you know? The first US Bitcoin futures exchange-traded fund (ETF), the ProShares Bitcoin Strategy ETF (BITO), was launched on Oct. 19, 2021, with more than $1 billion in trading volume on its inaugural day.
Grayscale’s role in crypto institutionalization
Grayscale has been instrumental in the institutionalization of crypto. Established in 2013, it has evolved into one of the world’s largest digital asset investment platforms, managing over $35 billion in assets. It has now introduced staking-enabled offerings that integrate blockchain yield mechanisms within Wall Street’s traditional framework.
By providing regulated and user-friendly investment options, Grayscale allows investors to access cryptocurrencies without the headaches of managing wallets, running nodes, or addressing validator risks. Through staking-enabled products like the Grayscale Ethereum Trust (ETHE) and Grayscale Solana Trust (GSOL), Grayscale has fused the yield-generating aspects of blockchain networks with the regulatory and custodial standards of traditional finance.
By employing trusted custodians, a diversified network of validator partners, and transparent reporting, Grayscale has established a secure and compliant avenue for investors to engage in staking. It has transformed staking from a convoluted, retail-focused process into a professional investment opportunity.
Did you know? The US approved its first spot Bitcoin (BTC) ETFs in January 2024 after years of rejections — marking a significant milestone in Wall Street’s embrace of crypto.
The turning point: Regulatory and market shifts
Grayscale’s launch of staking-enabled funds signifies a crucial milestone shaped by changing oversight and increased market competition. The US Securities and Exchange Commission issued guidance for crypto ETPs in May 2025, clarifying that certain custodial staking activities can align with existing securities laws when overseen by regulated custodians and under transparent frameworks. This development has alleviated previous impediments that hindered ETFs from obtaining onchain rewards.
Simultaneously, competition has heightened as prominent players like BlackRock and Fidelity have entered the crypto ETF sphere, driving innovation. In response, Grayscale introduced staking-enabled ETPs that intertwine yield generation with conventional fund structures. To bolster investor confidence, it launched educational initiatives such as “Staking 101: Secure the Blockchain, Earn Rewards” to foster transparency and understanding.
Did you know? In 2025, Ether ETFs began facilitating onchain staking, allowing investors to earn yields without needing to interact with a crypto wallet.
How Grayscale’s spot crypto ETPs are delivering staking yield to investors
Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Mini Trust (ETH) are spot Ether ETPs that now support onchain staking, while Grayscale Solana Trust (GSOL) has also enabled staking while trading over the counter. Together, these offerings are the first US-listed products to combine spot crypto exposure with staking rewards.
Each fund has a distinct reward framework. ETHE disburses staking rewards directly to investors, whereas ETH and GSOL incorporate rewards into the fund’s net asset value (NAV), gradually influencing share price. Following deductions for custodian and sponsor fees, investors receive a net yield from validator rewards.
Operationally, Grayscale utilizes institutional custodians and a diverse network of validator providers for passive staking. This structure helps mitigate risks such as slashing or downtime while maintaining liquidity. Clear disclosures, reporting, and adherence to regulatory standards increase investor trust.
Grayscale staked 32,000 ETH (approximately $150 million) the day after enabling staking for its Ether ETPs, becoming the first US crypto fund issuer to provide staking-based passive income via US-listed spot products.
Risks and criticisms of Grayscale’s staking funds
Regulatory ambiguity remains a significant concern for staking-enabled products. Unlike fully registered ETFs under the Investment Company Act of 1940, Grayscale’s ETHE and ETH are structured as ETPs with differing investor protections and disclosure obligations. GSOL, which continues to be traded over the counter, is pending regulatory approval for uplisting, causing uncertainty about its long-term status and governance. Future regulatory changes or stricter SEC enforcement could complicate the model further or restrict staking within regulated funds.
Operationally, risks such as validator performance, slashing incidents, and downtime continue to loom. Balancing liquidity with staking lock-ups and ensuring equitable, transparent distribution of rewards among shareholders adds further intricacy to fund management.
Market adoption remains another hurdle. It is yet to be seen how staking-enabled ETPs will fare against Ether ETFs.
Decentralization issues are also crucial. Institutional staking could amplify validator control, giving large funds disproportionate influence over governance and network security of the underlying blockchains, which contradicts the fundamental principles of decentralization.
How Grayscale’s ETPs transform crypto from price tracker to income asset
Grayscale’s staking-enabled ETPs have substantially influenced Wall Street and the broader crypto landscape. They connect blockchain-based yield with regulated financial products, evolving crypto ETPs from mere price trackers into income-generating assets. This initiative represents a crucial step in institutional adoption. Regulated staking on Ethereum and Solana could attract significant new capital to these networks while serving as a model for products associated with other PoS blockchains or tokenized assets.
At the network level, institutional staking could bolster security and protocol stability. However, it may also raise concerns about centralization if large funds dominate validator roles. This could affect yields and governance equilibrium. Grayscale’s staking-enabled ETPs are likely to influence forthcoming funds, shaping standards for transparency, risk disclosures, taxation, and investor protections.
This article does not constitute investment advice or recommendations. Every investment and trading decision carries risks, and readers should perform their own research when making a choice.
