The wait for a U.S. Ether ETF is nearing its end, with SEC Chair Gensler suggesting approval by September. It wasn’t long ago Bitcoin ETFs saw approval, which brought a lot of renewed excitement to the cryptocurrency market. While the Bitcoin ETFs were the big news, it left some crypto enthusiasts asking, “What’s next?” Ether is the natural answer to that question, though many altcoins are hoping to get on board the ETF train as well. The approval for Bitcoin certainly opened the door, and it’s probably only a matter of time before many favorite tokens pour into cryptocurrency ETFs.
The next in line is Ether, though there is a twist: these ETFs likely won’t offer staking rewards, a key feature of the Ethereum network. (Ether is the name of the token, while Ethereum is the blockchain.)
If you don’t already know, staking allows for users of a Proof-of-Stake (PoS) cryptocurrency like Ether to earn tokens by helping to validate transactions on the blockchain. It’s all a very complex and technical way of generating what sort of amounts to “interest”. By staking your Ether, you’ll be able to earn more Ether over time. This is one big appeal of PoS cryptos over those that require mining, such as Bitcoin. However, the staking feature is likely not going to make it into the structure of Ethereum-based ETFs (and possibly future PoS ETFs like Solana).
This might seem like a turn-off for investors, but according to Ophelia Snyder of 21Shares, institutional interest remains strong. Here’s why:
- Focus on Exposure, Not Yield: For institutions, simply gaining exposure to Ether’s potential for growth might outweigh the lack of staking rewards. They may have their own staking strategies or prioritize the ease and security of an ETF.
- Separate Products for Staking Needs: Snyder suggests there could be a market for both staking and non-staking Ether ETFs. This caters to different investor preferences and could boost overall investment in the Ethereum ecosystem.
- Institutional Investors Are Cautious Stakers: Staking can involve complex logistics and potential withdrawal delays. Institutional investors might be wary of these risks and prefer the simplicity of an ETF.
JPMorgan’s Bullish Prediction
Even without staking, JPMorgan predicts significant inflows into Ether ETFs by year-end, with the potential to double if staking is included. This suggests strong underlying institutional demand for the token.
The Bottom Line
The lack of staking in Ether ETFs might not be the dampener some expect. Institutions may be prioritizing other factors, and the ETF market could adapt with staking-focused products in the future.
As the SEC greenlight approaches, one thing seems clear: the future of Ethereum is attracting big money.
