Staking Could Make Ethereum ETFs More Competitive with Bitcoin

Staking could play a pivotal role in enhancing the appeal of U.S.-based Ethereum exchange-traded funds (ETFs), according to Tom Wan, a former crypto analyst at 21.co.

Wan suggests that incorporating staking into Ethereum ETFs could lower management fees, increase the total amount of staked Ethereum, and provide investors with more incentives, potentially making these funds more competitive against Bitcoin ETFs.

Currently, no U.S. Ethereum ETFs include staking due to regulatory concerns, particularly from the U.S. Securities and Exchange Commission (SEC) about whether staking services might be seen as unregistered securities offerings.

However, analysts believe that allowing staking would significantly benefit these ETFs. Staking could reduce management fees—often as high as 2.5%—by enabling ETFs to stake a portion of assets, covering operating costs without burdening investors. This could make Ethereum ETFs more cost-effective and appealing to investors.

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In regions like Europe, firms such as CoinShares and Bitwise have already integrated staking rewards with reduced fees, proving the model’s success. Wan estimates that staking within ETFs could contribute an additional 550,000 to 1.3 million ETH to the staked supply, boosting Ethereum’s network stability and attracting more capital.

Wan also highlighted that major ETF issuers like 21Shares, Bitwise, and VanEck have experience with staking, giving them an edge. Smaller firms might offer higher staking yields to remain competitive.

Ultimately, he believes staking could reshape the Ethereum staking ecosystem by improving liquidity and offering investors greater flexibility through liquid staking solutions like stETH. This approach could make Ethereum ETFs a more compelling option for investors, rivaling Bitcoin ETFs in the process.

Alexander Stefanov