Expert Identifies Staking as a Key Barrier to Approval of Spot Ethereum ETFs
The head of research at Galaxy Research has deemed staking a "stumbling block" in the launch of spot Ethereum ETFs. Alex Thorn of Galaxy Research suggests that the SEC is open to a compromise concerning crypto funds based on the asset. The agency may classify locked tokens as securities, without applying the same designation to Ethereum itself.
Alex Thorn, the head of research at Galaxy Research, has expressed that changing attitudes towards the potential approval of spot Ethereum ETFs may be related to staking. He believes that this issue is a major obstacle to introducing this new class of assets. Thorn pointed out recent reports that have increased the likelihood of spot Ethereum ETF approvals from 25% to 75%. He suggests that the Securities and Exchange Commission (SEC) in the U.S. is considering different interpretations of assets associated with this cryptocurrency.
According to Thorn, the agency might classify staked Ethereum (sETH) as a security. However, the main asset would not be categorized as such, he speculates. Thus, the SEC is attempting to find a way out of the current situation, where investors, policymakers, and the public are exerting significant pressure on the agency. In other words, the analyst believes that the agency might approve the launch of spot ETFs based on Ethereum. However, one of the conditions for crypto fund providers will be the exclusion of staking from the list of available options, Thorn suggests.
It should be noted that several companies had previously included this feature in their updated applications for spot Ethereum ETFs. According to the documents, crypto funds requested permission to generate income from assets through this service.
Some time later, information emerged that some companies were removing staking from their applications. For instance, firms like Ark Invest and 21Shares did so. Some experts then noted that the refusal to include staking in the joint crypto fund by these firms indirectly points to the existence of a corresponding requirement from the SEC. Although there is no direct evidence of this, analysts expect to see similar changes in applications from other companies.
Previously, companies such as Grayscale Investments and Fidelity Investments also included the staking function in the structure of their future spot Ethereum ETFs.
We have previously reported that Coinbase has stated that the timeframes and chances of Ethereum ETF approval have been underestimated.
