Key conclusions

• Grayscale has combined established finance and decentralized cryptocurrency to launch the first public staking investment vehicle.

• Its staking ETPs allow investors to earn blockchain-based rewards without having to run validator nodes or manage complicated technical and fiduciary risks.

• Grayscale Ether and Solana ETP platforms are the first in the US to combine exposure to spot cryptocurrencies with staking rewards, payout via fund NAV or direct payouts.

• These products face operational challenges such as validator performance issues and liquidity locks, as well as regulatory and centralization risks associated with institutional staking.

Wall Street and the cryptocurrency world have long operated in separate spaces. While Wall Street was defined by established finance and clear regulatory standards, the cryptocurrency industry evolved around decentralized systems and changing regulations. This divide is now narrowing thanks to the launch of the first listed investment vehicle for staking cryptocurrencies.

Launched by Grayscale Investments, one of the largest digital asset managers, this exchange-traded staking product (ETP) signals a up-to-date phase of cryptocurrency maturation and integration with established finance. It’s more than just a fund; it is a bridge that provides established investors with a regulated path to realize the growth potential of cryptocurrencies.

This article discusses what cryptocurrency staking is, what prevents greater institutional participation, and how Grayscale encourages the institutionalization of cryptocurrency investing. It also highlights regulatory and market developments regarding staking and explains how Grayscale’s spot crypto ETPs provide investors with staking profits. Finally, it outlines the risks associated with staking funds and shows how Grayscale’s ETPs have transformed cryptocurrencies from price-tracking assets to income-producing assets.

Cryptocurrency staking and institutional barriers

Cryptocurrency staking involves committing digital assets such as Ether (ETH) or Solana (SOL) to assist secure and verify transactions on proof-of-stake (PoS) blockchains. In return, participants earn rewards – similar in concept to earning interest – for supporting network operations.

Unlike Bitcoin’s proof-of-work (PoW) model, which relies on energy-intensive mining, PoS systems work differently. They depend on the staked capital and the performance of the validator, not on the computing power. This design makes them much more energy effective and accessible to a wider range of participants.

Overall, both retail and institutional investors continue to focus on buying and holding tokens for price gains, rather than staking them. Operating validator nodes requires significant capital, technical knowledge, and uptime. It also exposes participants to risks such as severe penalties and care challenges. Additionally, in many jurisdictions the regulatory approach to staking rewards remains unclear.

Did you know? The first U.S. bitcoin futures fund (ETF), ProShares Bitcoin Strategy ETF (BITO), launched on October 19, 2021, and traded above $1 billion on its first day.

Grayscale’s role in crypto-institutionalization

Grayscale has played a key role in the institutionalization of cryptocurrencies. Founded in 2013, it has become one of the world’s largest digital asset investing platforms, with over $35 billion in assets under management. It has now introduced staking products that bring the mechanics of blockchain profits into the established Wall Street framework.

By offering regulated and user-friendly investment products, Grayscale enables investors to gain exposure to cryptocurrencies without the challenges of managing portfolios, operational nodes, or dealing with validator risk. Through staking offerings such as Grayscale Ethereum Trust (ETHE) and Grayscale Solana Trust (GSOL), Grayscale has integrated the yield-generating features of blockchain networks with the regulatory and custodial standards of established finance.

Using trusted custodians, a diverse network of validation partners, and see-through reporting, Grayscale has created a secure and compliant way for investors to participate in staking. This has transformed staking from a complicated, retail-oriented process into a professional investment opportunity.

Did you know? After years of refusals, the United States has approved its first bitcoin spot (BTC) ETFs in January 2024 – a milestone in the acceptance of cryptocurrencies on Wall Street.

Turning point: regulatory and market changes

Grayscale’s launch of staking funds marks a key milestone shaped by evolving governance and increasing market competition. The U.S. Securities and Exchange Commission issued guidance for cryptocurrency ETPs in May 2025, clarifying that certain custodial staking activities may be subject to existing securities laws if governed by regulated custodians and see-through structures. This development has eased previous barriers that prevented ETFs from earning rewards online.

Meanwhile, competition has intensified as major players such as BlackRock and Fidelity have entered the cryptocurrency ETF arena, driving innovation. In response, Grayscale has introduced staking-enabled ETPs that combine yield generation with established fund structures. To boost investor confidence, educational initiatives such as “Staking 101: Secure the Blockchain, Earn Rewards” have been launched to promote transparency and understanding.

Did you know? In 2025 Ether ETFs has begun enabling onchain staking, allowing investors to earn without touching their cryptocurrency wallet.

How Grayscale’s Spot Crypto ETPs Provide Investors with Staking Income

Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Mini Trust (ETH) are spot Ether ETP platforms that now support onchain staking. Grayscale Solana Trust (GSOL) has also enabled over-the-counter staking while trading. Collectively, these offerings are the first U.S.-listed products to combine spot cryptocurrency exposure with staking rewards.

Each fund has a unique reward structure. ETHE pays staking rewards directly to investors, while ETH and GSOL incorporate the rewards into the fund’s net asset value (NAV), gradually influencing the share price. After deducting custodian and sponsor fees, investors receive the net profit from the validator’s rewards.

Operationally, Grayscale leverages institutional custodians and a diverse network of validator providers for passive staking. This setup helps manage risks such as cuts or downtime while supporting liquidity. Clear disclosure, reporting and compliance with regulatory frameworks boost investor confidence.

Grayscale staked 32,000 ETH (about $150 million) per day after enabling staking of its Ether ETPs, making it the first U.S. crypto fund issuer to offer staking-based passive income through U.S.-listed spot products.

Dangers and criticisms of Grayscale stake funds

Regulatory uncertainty remains a key issue for staking products. Unlike fully registered ETFs under the Investment Company Act of 1940, Grayscale’s ETHE and ETH are structured as ETPs with various investor protections and disclosure requirements. The GSOL exchange, still traded over the counter, is awaiting regulatory approval for a higher listing, creating uncertainty about its long-term status and oversight. Future policy changes or more stringent SEC enforcement could further complicate the model or restrict investing in regulated funds.

From an operational perspective, risks remain such as validator performance, cutback events, and downtime. Balancing liquidity through staking locks and ensuring fair, see-through distribution of rewards to shareholders further complicates fund management.

Market adoption creates another challenge. It is vital to see how staking-enabled ETPs perform in competition with Ether ETFs.

Concerns about decentralization are also vital. Institutional staking can boost validator control, giving enormous funds outsized influence over the governance and security of the underlying blockchain networks. This would be contrary to the basic principles of decentralization.

How Grayscale’s ETPs are transforming cryptocurrency from a price tracker to an income asset

Grayscale’s staking ETPs have made a significant impact on Wall Street and the broader cryptocurrency ecosystem. It combines blockchain-based yield with regulated financial products, transforming cryptocurrency ETPs from elementary price trackers into income-generating assets. This initiative represents a key advance in institutional adoption. Regulated staking on Ethereum and Solana could attract significant up-to-date capital to these networks, while also acting as a model for products tied to other PoS blockchains or tokenized assets.

At the network level, institutional staking could boost the security and stability of the protocol. However, it may raise centralization concerns if enormous funds dominate validator roles. This may impact profitability and management sustainability. Grayscale’s staking ETPs will shape the future of funds, influencing standards of transparency, risk disclosure, taxation and safeguards for investors.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.