Ethereum ETFs May Rally Soon Following Staking Approval

Key Takeaways

• Ethereum ETF staking could add 3% yield, pushing unleveraged returns to 10% and up to 30% with leverage.
• Institutional investors are drawn to stable income, making staking a powerful value-add.
• SEC acknowledgment of staking proposals suggests regulatory approval may be near.
• Staking-enabled ETFs could boost liquidity, onchain participation, and overall market valuations.
• These developments could reshape capital flow and establish Ethereum ETFs as a mainstream investment vehicle.

Institutional Demand Via Ethereum ETF Staking

Analysts believe that staking capabilities for Ethereum exchange-traded funds will open the floodgates for institutional capital.

Source: X (@NateGeraci)

Markus Thielen, Head of Research at 10x Research, said that adding staking to Ether ETFs could “dramatically reshape the market” by increasing overall yield and offering stronger value propositions to investors.

Currently, U.S.-listed Ethereum ETFs are still under review by the Securities and Exchange Commission (SEC), which has yet to approve staking functionalities. However, recent developments, such as the SEC acknowledging Nasdaq’s application to add staking to BlackRock’s iShares Ethereum ETF, suggest that approval may not be far off.

Boosting Yield Potential

Thielen pointed out that the existing basis trade between spot Ether ETFs and Ethereum futures already offers a 7% annualized return. If staking were approved, this could add another 3% yield, taking the total potential return to 10% annually without leverage.

This potential increase in returns could lead to a structural shift in how institutional capital is allocated within the crypto space.

Diversification with Yield

Ryan McMillin, Chief Investment Officer at Australian firm Merkle Tree Capital, believes staking could make Ethereum ETFs significantly more appealing to institutions. Unlike Bitcoin, which serves as a digital gold asset, Ethereum offers a more dynamic role in the crypto ecosystem.

He explained that pension funds and other long-term institutional investors often prioritize steady income over uncertain capital gains. A 3–5% staking yield, combined with Ethereum’s infrastructure role in decentralized finance, makes it a “unique and compelling” portfolio addition.

Liquidity and Onchain Participation On The Rise

Yield-Driven Growth

Hank Huang, CEO of Kronos Research, emphasized that staking approval will do more than just enhance returns—it could dramatically increase onchain participation and liquidity.

Huang said:

“Ether ETFs offering yield plus asset growth flips the switch on demand. These ETFs will pull in serious capital and drive higher valuations across the ecosystem.”

Source: X (@JSeyff)

By providing a compliant, custodial-free option to earn staking rewards, these products could appeal to institutions wary of handling private keys or interacting directly with DeFi protocols.

Setting A New Standard For Crypto ETFs

Huang added that a staking-enabled Ethereum ETF with flexible exit options and reliable yield would set a new gold standard in crypto investing.

He explained:

“This kind of ETF would raise the bar for the entire sector and pave the way for more mainstream adoption.”

Such a development could act as a bridge between traditional finance and decentralized ecosystems, making Ethereum not just an asset but a platform for yield generation and innovation.

FAQ

What is an Ethereum ETF?

An Ethereum ETF is an exchange-traded fund that tracks the price of Ethereum (ETH), allowing investors to gain exposure without directly holding the asset.

Can Ethereum ETFs offer staking right now?

As of mid-2025, Ethereum ETFs in the U.S. are not yet authorized to offer staking. However, applications from major firms like BlackRock are under review by the SEC.

How does staking increase yield?

Staking allows ETH holders to earn rewards by participating in the network’s security. Adding staking to ETFs means those funds could earn passive income, boosting overall returns for investors.

Why would institutions be interested in staking through ETFs?

Institutions often avoid holding crypto directly due to security and regulatory concerns. An ETF with staking provides a regulated, simplified way to earn yield without direct custody of assets.

How will staking impact Ethereum’s market?

Increased institutional participation could enhance liquidity, raise ETH demand, and contribute to price appreciation. It also encourages broader onchain activity.