Key takeaways
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Grayscale has connected traditional finance with decentralized cryptocurrency by launching the first publicly traded investment vehicle focused on staking.
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Its staking-enabled ETPs allow investors to gain blockchain rewards without the need to run validator nodes or handle complex technical and custody risks.
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Grayscale’s Ether and Solana ETPs are the first in the US to offer spot crypto exposure along with staking rewards, distributing yields through the fund’s NAV or direct payments.
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These products encounter operational challenges, such as validator performance issues, liquidity lock-ups, and regulatory and centralization risks associated with institutional staking.
Historically, Wall Street and the crypto sector have functioned in separate realms. Wall Street, shaped by traditional finance and clear regulations, contrasts with the decentralized systems and evolving regulations of the crypto industry. This gap is closing with the introduction of the first publicly traded investment vehicle dedicated to cryptocurrency staking.
Introduced by Grayscale Investments, a leading digital asset manager, this staking-enabled exchange-traded product (ETP) marks a new stage in the integration of crypto with traditional finance. It serves not merely as a fund, but as a bridge for traditional investors seeking a regulated means to access the growth prospects of crypto staking.
This article explores crypto staking, the barriers hindering institutional participation, and Grayscale’s role in advancing crypto investment at the institutional level. It also examines the regulatory and market changes affecting staking and explains how Grayscale’s spot crypto ETPs provide staking yields to investors. Furthermore, it outlines the risks associated with staking funds and demonstrates how Grayscale’s ETPs have transitioned crypto from merely a price-tracking asset to a source of income.
Crypto staking and institutional barriers
Crypto staking entails committing digital assets like Ether (ETH) or Solana (SOL) to secure and validate transactions on proof-of-stake (PoS) blockchains. Participants receive rewards akin to earning interest for their contributions to network operations.
In contrast to Bitcoin’s proof-of-work (PoW) model, which depends on energy-intensive mining, PoS systems rely on staked capital and validator performance instead of computing power. This design enhances energy efficiency and accessibility for a broader range of participants.
Generally, both retail and institutional investors tend to prefer buying and holding tokens for price appreciation rather than staking them. Operating validator nodes demands significant capital, technical expertise, and continuous uptime, alongside risks like slashing penalties and custody concerns. Additionally, regulatory clarity regarding staking rewards remains ambiguous in many jurisdictions.
Did you know? The first US Bitcoin futures exchange-traded fund (ETF), the ProShares Bitcoin Strategy ETF (BITO), was launched on October 19, 2021, achieving over $1 billion in volume on its first day.
Grayscale’s role in crypto institutionalization
Grayscale has been pivotal in institutionalizing crypto. Established in 2013, it has evolved into one of the largest digital asset investment platforms, managing over $35 billion in assets. Grayscale has now introduced staking-enabled products that align blockchain yield mechanics with Wall Street’s traditional framework.
By providing regulated and user-friendly investment options, Grayscale enables investors to engage with cryptocurrencies without the associated challenges of managing wallets, operating nodes, or dealing with validator risks. With its staking-enabled offerings such as the Grayscale Ethereum Trust (ETHE) and Grayscale Solana Trust (GSOL), Grayscale has successfully blended the income-generating features of blockchain networks with the regulatory and custodial norms of traditional finance.
Leveraging trusted custodians, a diversified network of validator partners, and transparent reporting, Grayscale has established a secure and compliant avenue for investors to participate in staking, transforming it from a complex retail-focused endeavor into a professional investment opportunity.
Did you know? After years of rejections, the US authorized its first spot Bitcoin (BTC) ETFs in January 2024, marking a significant achievement in Wall Street’s acceptance of crypto.
The turning point: Regulatory and market shifts
Grayscale’s launch of staking-enabled funds represents a significant milestone influenced by changing regulations and increasing market competition. In May 2025, the US Securities and Exchange Commission issued guidance for crypto ETPs, clarifying that specific custodial staking activities can operate under existing securities laws if managed through regulated custodians and transparent structures. This development has alleviated previous barriers preventing ETFs from obtaining on-chain rewards.
Simultaneously, competition has escalated, with major firms like BlackRock and Fidelity entering the crypto ETF landscape, prompting further innovation. In response, Grayscale introduced staking-enabled ETPs that merge yield generation with traditional fund structures. To build investor confidence, it launched educational initiatives like “Staking 101: Secure the Blockchain, Earn Rewards” to promote transparency and understanding.
Did you know? In 2025, Ether ETFs began enabling on-chain staking, allowing investors to earn yield without managing 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 incorporated staking while trading over the counter. Collectively, these offerings are the first US-listed products to combine spot crypto exposure with staking rewards.
Each fund features a distinct reward structure. ETHE directly pays staking rewards to investors, while ETH and GSOL incorporate rewards into the fund’s net asset value (NAV), which gradually influences share price. After deducting custodian and sponsor fees, investors receive a net yield from validator rewards.
Operationally, Grayscale collaborates with institutional custodians and a diverse network of validator providers for passive staking. This configuration helps mitigate risks like slashing or downtime while supporting liquidity. Clear disclosures, reporting, and adherence to regulatory guidelines enhance investor confidence.
Grayscale staked 32,000 ETH (approximately $150 million) the day after enabling staking for its Ether ETPs, positioning itself as the first US crypto fund issuer to offer staking-based passive income through US-listed spot products.
Risks and criticisms of Grayscale’s staking funds
Regulatory uncertainty remains a prominent 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 different investor protections and disclosure standards. GSOL, currently traded over the counter, awaits regulatory approval for uplisting, adding uncertainty regarding its long-term status and oversight. Future policy changes or tighter SEC enforcement could complicate the model further or restrict staking within regulated funds.
Operationally, risks related to validator performance, slashing incidents, and downtime continue to exist. Balancing liquidity with staking lock-ups and guaranteeing a fair, transparent distribution of rewards among shareholders adds to the complexities of fund management.
Market acceptance presents an additional challenge. It remains to be seen how staking-enabled ETPs will perform against Ether ETFs.
Concerns regarding decentralization are also significant. Institutional staking could enhance validator control, providing large funds with disproportionate influence over governance and network security of the underlying blockchains, which contradicts decentralization principles.
How Grayscale’s ETPs transform crypto from price tracker to income asset
Grayscale’s staking-enabled ETPs have profoundly influenced Wall Street and the broader crypto ecosystem. They connect blockchain-based yield with regulated financial products, transforming crypto ETPs from mere price trackers into income-generating assets. This initiative marks a pivotal advancement in institutional adoption. Regulated staking on Ethereum and Solana could attract substantial new capital to these networks while serving as a framework for products tied to other PoS blockchains or tokenized assets.
On the network level, institutional staking could enhance security and protocol stability. Nonetheless, it may raise centralization concerns if large funds dominate validator roles, potentially impacting yields and governance balance. Grayscale’s staking-enabled ETPs are likely to shape future funds, influencing standards for transparency, risk disclosures, taxation, and investor protections.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should conduct thorough research before making any choices.
