Several well-known companies, such as Ark Investments Management and Fidelity Investments, have decided to remove staking from their plans for an Ether (ETH) exchange-traded fund (ETF) due to regulatory pressures from the United States Securities and Exchange Commission (SEC).
While this strategic shift may increase the chances of an Ether ETF approval, it has sparked concern and debate in the crypto industry because staking plays a crucial role in the functionality of cryptocurrencies. Staking involves locking up digital assets to validate transactions and earn rewards, making it an attractive option for many investors. Without staking in Ether ETFs, their appeal may be significantly reduced compared to directly purchasing Ether and staking it for yield.
Brian Rudick, a senior strategist at GSR, highlighted the immediate opportunity cost of holding Ether through an Ether ETF that lacks staking.
The removal of staking from Ether ETFs, which are built using the proof-of-stake (PoS) mechanism, could have broader implications for the supply, network security, and decentralization of the Ethereum network, as there would be less staked ETH.
One member of the X community expressed their concerns about the elimination of staking from Ether ETFs, suggesting that it was due to the price difference between Ether and Bitcoin (BTC).
Another member compared staking to earning interest on savings, viewing it as falling under the securities umbrella.
Amidst the community’s conflicting opinions on Ether ETF staking, the SEC has initiated discussions with potential issuers of spot Ether ETFs. A decision is expected to be made soon. This news comes shortly after the approval of the Financial Innovation and Technology for the 21st Century Act, also known as the FIT21 crypto bill, by the U.S. House of Representatives. The bill received support from 208 Republicans and 71 Democrats, while 136 voted against it.
In the battle between the SEC and the crypto industry, the SEC is facing strong opposition from legal experts in the crypto field, akin to Godzilla battling Kong.