By
Godfrey Benjamin
June 28th, 2024
While all of the prospective Ethereum ETF issuers have fulfilled the bidding of the US SEC by removing staking in their applications, investors might still favor ETH in the ETF market.
Mike Novogratz, CEO of Galaxy Digital Holdings Ltd (TSE: GLXY), has expressed optimism regarding the future of staking for US spot Ethereum ETF products. Despite the current regulatory stance of the US Securities and Exchange Commission (SEC), Novogratz believes that staking for these financial products will become a reality within the next two years.
Mike Novogratz Certain about Ethereum ETF Staking
In an interview at Consensus 24, the Galaxy Digital CEO shared his opinion, arguing that after 12-24 months of Ethereum ETF products without staking, the regulators will change the rules to include the offering. Meanwhile, Bloomberg ETF analyst Eric Balchunas estimated the S-1 approval and the trading of Spot Ethereum ETFs to be in June or July. As such, Mike’s projection would be around mid-2025 or mid-2026.
Novogratz’s prediction comes at a time when the SEC has remained cautious about approving spot cryptocurrency ETFs. However, the landscape is slowly changing as regulatory frameworks evolve and market participants push for more sophisticated financial products.
Undoubtedly, the Hong Kong crypto market has been buzzing since the Securities and Futures Commission (SFC) approved six spot Bitcoin (BTC) and Ether ETFs at the end of April. The SFC is now considering allowing staking for these products. According to reports the commission is in talks with the crypto ETF issuers about permitting staking for Ethereum through licensed services. This could expand access to increased income for investors, allowing people to earn passively.
Notably, the regulatory approval might also put Hong Kong ahead of the US in this regard. It remains to be seen what the US will do regarding Ethereum staking.
ETH ETF Issuers Remove Staking from Their Applications
Recall that before the US SEC gave its approval for spot Ethereum ETFs, some top players like Fidelity Investments updated their S-1 filing to adjust to the SEC’s requirements and denounce Ethereum staking. Meanwhile, Fox Business reporter Eleanor Terrett revealed that CoinShares and Valkyrie, issuers of spot Bitcoin ETFs, will not apply for Spot Ethereum ETF.
The primary reason cited is the absence of a staking function. The companies believe that without this feature, the ETF lacks value for investors, particularly in a market already crowded with 8 issuers. However, with the US SEC approval, it would distinguish between Ethereum, Staked Ethereum (sETH), or staking as a service, and ETH as securities.
While all of the prospective Ethereum ETF issuers have fulfilled the bidding of the US SEC by removing staking in their applications, investors might still favor ETH in the ETF market. This is because its fundamentals are more tech-driven and align with the evolution of financial systems through smart contracts.
Ethereum’s Proof-of-Stake (PoS) consensus mechanism is also a boost as it is generally more environmentally friendly than Bitcoin.