Bitwise, in partnership with NYSE Arca, has been in months-long discussions with the SEC over a new feature in its spot Ethereum ETF, the ability to stake Ethereum held by the fund.
This would allow the fund to generate passive income for investors through Ethereum’s proof-of-stake protocol, where ETH tokens are locked to secure the network and earn validator rewards.
Source: sec.gov
The original ETF proposal was approved to hold ETH directly, reflecting Ethereum’s rising stature as a legitimate asset class. However, Bitwise’s request to include staking has triggered regulatory scrutiny over potential risks, including conflicts of interest, asset mismanagement, and market manipulation.
Ethereum staking involves locking up ETH tokens to help validate transactions and secure the Ethereum blockchain. In return, participants earn ETH rewards, much like interest in traditional finance.
While this model offers attractive yields, especially in volatile markets, it also comes with liquidity, custody, and governance challenges, particularly when wrapped into a publicly traded ETF structure.
On June 30th, 2025, the SEC released a formal statement confirming a new review process for the proposed staking addition to the Bitwise Ethereum ETF. Instead of issuing a decision, the agency opted to open the proposal to public comment, indicating that a final ruling may be weeks or even months away.
The move illustrates the SEC’s cautious approach toward combining traditional financial vehicles with decentralized crypto features. While many investors see staking as a way to enhance returns, the SEC is focused on maintaining market integrity and investor safety.
The main concerns cited by regulators include:
Despite these concerns, Bitwise argues that staking is a natural next step. The firm believes that enabling ETH staking within the ETF would not affect how the fund holds, values, or reports its assets, but could improve yields and make the product more attractive across the investor spectrum.
The current version of the Bitwise Ethereum ETF remains a standard spot ETH ETF, holding ETH without engaging in staking. However, the outcome of this review could set a precedent for the entire industry.
If the SEC approves Bitwise’s proposal, it could open the floodgates for other issuers, like Grayscale, Fidelity, or Ark Invest, to apply for similar staking permissions in their crypto ETFs.
In fact, some companies are already making moves in this direction. Gregory King, CEO of Rex-Osprey, recently announced the launch of a Solana staking ETF, scheduled for July 2nd.
The REX-Osprey™ SOL & Staking ETF
Source: X (@REXShares)
This step adds more pressure on U.S. regulators to develop a consistent framework around yield-generating crypto investment products.
An Ethereum ETF (Exchange-Traded Fund) allows investors to gain exposure to the price of Ethereum (ETH) without directly owning or managing the cryptocurrency. Spot ETH ETFs hold Ethereum as their underlying asset.
Staking involves locking ETH tokens to help secure the Ethereum blockchain, in return for earning validator rewards. When integrated into an ETF, staking could potentially increase yields for shareholders—but also introduces regulatory and operational complexities.
As of July 1st, 2025, no Ethereum ETFs with staking have been approved by the SEC. However, Rex-Osprey’s Solana staking ETF is expected to launch soon, possibly setting a parallel precedent.
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