Key takeaways
Grayscale has connected traditional finance with decentralized crypto by unveiling the first publicly traded staking investment vehicle.
Its staking-enabled ETPs allow investors to earn blockchain rewards without the need to manage validator nodes or navigate complex technical and custody risks.
Grayscale’s Ether and Solana ETPs are the first in the US that merge spot crypto exposure with staking rewards, distributing yields through the fund’s NAV or direct payouts.
These products encounter operational challenges, including validator performance issues and liquidity lock-ups, along with regulatory and centralization risks tied to institutional staking.
Traditionally, Wall Street and the crypto sector have been distinct. While Wall Street has thrived on traditional finance and clear regulations, the crypto sphere has developed around decentralized systems and evolving rules. This divide is closing now, thanks to the introduction of the first publicly traded investment vehicle focused on staking cryptocurrency.
Launched by Grayscale Investments, one of the leading digital asset managers, this staking-enabled exchange-traded product (ETP) marks a new chapter in the integration of crypto with traditional finance. It represents more than just a fund; it serves as a bridge for conventional investors to access the growth potential of crypto staking within a regulated framework.
This article examines what crypto staking entails, the obstacles that have hindered greater institutional engagement, and how Grayscale has promoted the institutionalization of crypto investments. It further highlights regulatory and market transformations affecting staking and outlines how Grayscale’s spot crypto ETPs provide staking yields to investors. Lastly, it discusses the risks involved with staking funds and demonstrates how Grayscale’s ETPs have transitioned crypto from a price-tracking asset to a source of income.
Crypto staking and institutional barriers
Crypto staking entails committing digital assets such as Ether (ETH) or Solana (SOL) to secure and validate transactions on proof-of-stake (PoS) blockchains. In exchange, participants receive rewards—analogous to earning interest—for supporting network operations.
Unlike Bitcoin’s proof-of-work (PoW) model, which is reliant on energy-intensive mining, PoS systems function differently. They depend on staked capital and validator performance rather than computing power, making them significantly more energy-efficient and accessible to a broader audience.
Overall, both retail and institutional investors tend to concentrate on buying and holding tokens for price gains instead of staking them. Operating validator nodes demands considerable capital, technical expertise, and constant uptime, along with exposing participants to risks like slashing penalties and custody issues. Additionally, in many regions, the regulatory approach to staking rewards remains ambiguous.
Did you know? The inaugural US Bitcoin futures exchange-traded fund (ETF), the ProShares Bitcoin Strategy ETF (BITO), commenced on Oct. 19, 2021, and saw over $1 billion in volume on its first day.
Grayscale’s role in crypto institutionalization
Grayscale has been pivotal in the institutionalization of crypto. Established in 2013, it has evolved into one of the largest digital asset investment platforms, managing over $35 billion in assets. It has now introduced staking-enabled products that integrate blockchain yield mechanics within the traditional frameworks of Wall Street.
By offering regulated and user-friendly investment options, Grayscale enables investors to gain exposure to cryptocurrencies without the complexities of managing wallets, operating nodes, or handling validator risks. Its staking-enabled offerings, such as the Grayscale Ethereum Trust (ETHE) and Grayscale Solana Trust (GSOL), merge the yield-generating aspects of blockchain networks with the regulatory and custodial standards of conventional finance.
Grayscale employs trusted custodians, a diverse network of validator partners, and transparent reporting to create a secure, compliant method for investor participation in staking. It has transformed staking from a complicated, retail-focused process into a structured investment opportunity.
Did you know? After years of rejections, the US granted approval for its first spot Bitcoin (BTC) ETFs in January 2024—a significant milestone in Wall Street’s embrace of crypto.
The turning point: Regulatory and market shifts
Grayscale’s launch of staking-enabled funds represents a crucial milestone shaped by evolving regulatory oversight and increasing market competition. The US Securities and Exchange Commission provided guidance for crypto ETPs in May 2025, indicating that specific custodial staking activities may operate under existing securities laws when managed through regulated custodians and transparent frameworks. This advancement has alleviated previous barriers that hindered ETFs from earning on-chain rewards.
Simultaneously, competition has grown as significant players like BlackRock and Fidelity have ventured into the crypto ETF landscape, fostering innovation. In response, Grayscale introduced staking-enabled ETPs that integrate yield generation with traditional fund models. To bolster investor confidence, it launched educational initiatives like “Staking 101: Secure the Blockchain, Earn Rewards” aimed at enhancing transparency and understanding.
Did you know? In 2025, Ether ETFs began permitting on-chain staking, allowing investors to earn yield without ever 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 on-chain staking. Grayscale Solana Trust (GSOL) has also enabled staking while being traded over the counter. Collectively, these offerings are the first US-listed products to merge spot crypto exposure with staking rewards.
Each fund has a distinct reward structure. ETHE delivers staking rewards directly to investors, while ETH and GSOL incorporate rewards into the fund’s net asset value (NAV), thereby affecting share prices over time. After accounting for custodian and sponsor fees, investors receive a net yield from validator rewards.
Operationally, Grayscale utilizes institutional custodians and a diverse network of validators for passive staking. This arrangement helps mitigate risks such as slashing or downtime while supporting liquidity. Clear disclosures, reporting, and adherence to regulatory frameworks bolster investor confidence.
Grayscale staked 32,000 ETH (approximately $150 million) the day after it enabled staking for its Ether ETPs, making it 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 uncertainty remains a critical 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, which come with different investor protections and disclosure obligations. GSOL, still being traded over the counter, is awaiting regulatory approval for uplisting, creating ambiguity regarding its long-term viability and oversight. Future policy adjustments or stricter SEC enforcement could complicate the model or restrict staking within regulated funds.
Operational risks such as validator performance, slashing incidents, and downtime are ongoing issues. Balancing liquidity with staking lock-ups and ensuring an equitable distribution of rewards among shareholders add further complexities to fund management.
Market adoption presents another obstacle. It remains to be seen how staking-enabled ETPs will perform against Ether ETFs.
Concerns over decentralization are significant as well. Institutional staking may enhance validator control, giving substantial funds disproportionate influence over governance and network security of the associated blockchains, counter to the core principles of decentralization.
How Grayscale’s ETPs transform crypto from price tracker to income asset
Grayscale’s staking-enabled ETPs have significantly impacted Wall Street and the wider crypto ecosystem. They link blockchain-based yield with regulated financial products, converting crypto ETPs from mere price trackers into income-generating assets. This initiative represents a crucial advance in institutional adoption. Regulated staking on Ethereum and Solana could attract substantial new capital to these networks while serving as a blueprint for products tied to other PoS blockchains or tokenized assets.
From a network perspective, institutional staking has the potential to enhance security and protocol stability. However, it may raise concerns about centralization if major funds dominate validator roles, which could impact yields and governance balance. Grayscale’s staking-enabled ETPs are likely to influence forthcoming funds, setting new standards for transparency, risk disclosures, taxation, and investor protections.
This article does not constitute investment advice or recommendations. Every investment and trading decision involves risk, and readers should conduct their own research when making financial decisions.
