Key takeaways
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Grayscale has bridged traditional finance and decentralized crypto by launching the first publicly traded staking investment vehicle.
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Its staking-enabled ETPs allow investors to earn blockchain rewards without running validator nodes or managing complex technical and custody risks.
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Grayscale’s Ether and Solana ETPs are the first in the United States to combine spot exposure to crypto with staking rewards, paying returns via the fund’s net asset value or direct payments.
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These products face operational challenges, such as validator performance issues and liquidity holds, as well as regulatory and centralization risks related to institutional staking.
Wall Street and the crypto world have long operated in separate spaces. While Wall Street was defined by traditional finance and clear regulatory standards, the crypto industry evolved around decentralized systems and changing regulations. This gap is now narrowing, thanks to the launch of the first publicly traded investment vehicle dedicated to cryptocurrency staking.
Launched by Grayscale Investments, one of the largest digital asset managers, this staking-enabled exchange-traded product (ETP) marks a new phase in the maturation and integration of crypto with traditional finance. It is more than a fund; it is a bridge providing traditional investors with a regulated path to exploit the growth potential of crypto staking.
This article explains what crypto staking is, what has prevented greater institutional participation, and how Grayscale has encouraged the institutionalization of crypto investing. It also highlights regulatory and market changes surrounding staking and explains how Grayscale’s spot crypto ETPs provide staking returns to investors. Finally, it describes the risks associated with investing funds and shows how Grayscale ETPs transformed crypto from a price-tracking asset to an income-generating asset.
Crypto Staking and Institutional Barriers
Crypto staking involves staking digital assets like Ether (ETH) or Solana (SOL) to help secure and validate transactions on proof-of-stake (PoS) blockchains. In return, participants earn rewards – similar in concept to interests – for supporting the network’s operations.
Unlike Bitcoin’s proof-of-work (PoW) model, which relies on energy-intensive mining, PoS systems work differently. They depend on the capital involved and the performance of the validator rather than the computing power. This design makes them much more energy efficient and accessible to a wider range of participants.
In general, retail and institutional investors continue to focus on purchasing and holding tokens for price gains rather than staking them. Operating validator nodes requires significant capital, technical know-how, and uninterrupted availability. It also exposes participants to risks such as harsh sanctions and custody issues. Additionally, in many jurisdictions, the regulatory treatment of staking rewards remains unclear.
Did you know? The first U.S. Bitcoin futures exchange-traded fund (ETF), the ProShares Bitcoin Strategy ETF (BITO), launched on October 19, 2021 and traded over $1 billion in volume on its first day.
Grayscale’s role in institutionalizing crypto
Grayscale played a central role in the institutionalization of crypto. Founded in 2013, it has grown into one of the world’s largest digital asset investment platforms, managing over $35 billion in assets. It has now launched staking-enabled products that integrate blockchain yield mechanisms into the traditional Wall Street framework.
By offering regulated, user-friendly investment products, Grayscale allows investors to gain exposure to cryptocurrencies without the challenges of portfolio management, operating nodes, or validator risks. Through staking offerings such as Grayscale Ethereum Trust (ETHE) and Grayscale Solana Trust (GSOL), Grayscale has integrated the yield-generating features of blockchain networks with the regulatory and custody standards of traditional finance.
By leveraging trusted custodians, a diverse network of validator partners, and transparent reporting, Grayscale has established a secure and compliant way for investors to participate in staking. He transformed staking from a complex, retail-driven process to a professional investment opportunity.
Did you know? After years of denial, the United States has approved its first Bitcoin spot (BTC) ETF in January 2024 – a major milestone in Wall Street’s acceptance of crypto.
The turning point: regulatory and market developments
Grayscale’s introduction of staking-enabled funds marks a key milestone shaped by evolving surveillance and increasing market competition. The U.S. Securities and Exchange Commission issued guidance for crypto ETPs in May 2025, clarifying that certain custodial activities can operate within existing securities laws when managed by regulated custodians and transparent structures. This development removed previous barriers that prevented ETFs from earning on-chain rewards.
Meanwhile, competition has intensified as major players such as BlackRock and Fidelity have entered the crypto ETF arena, driving innovation. In response, Grayscale has deployed staking-enabled ETPs that combine yield generation with traditional fund frameworks. To build investor confidence, it has launched educational initiatives such as “Staking 101: Secure the Blockchain, Earn Rewards” to promote transparency and understanding.
Did you know? In 2025, Ether ETF began allowing on-chain staking, allowing investors to earn yield without ever touching a crypto wallet.
How Grayscale’s Spot Crypto ETPs Deliver Stake Yield for Investors
Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Mini Trust (ETH) are Spot Ether ETPs that now support on-chain staking. Grayscale Solana Trust (GSOL) also enabled staking during OTC transactions. Together, these offerings are the first US-listed products to combine spot crypto exposure with staking rewards.
Each fund has a unique reward structure. ETHE pays staking rewards directly to investors, while ETH and GSOL integrate the rewards into the fund’s net asset value (NAV), which has a gradual impact on the stock price. After deducting custodian and sponsor fees, investors receive a net return from validator rewards.
Operationally, Grayscale uses institutional custodians and a diverse network of validator providers for passive staking. This setup helps manage risks such as markdowns or downtime while supporting liquidity. Clear information, reporting and compliance with regulatory frameworks build investor confidence.
Grayscale staked 32,000 ETH (approximately $150 million) per day after enabling staking of its Ether ETPs, making it the first US crypto fund issuer to offer passive income based on staking via US-listed spot products.
Risks and criticisms of Grayscale staking funds
Regulatory uncertainty remains a key issue for staking-enabled products. Unlike ETFs that are fully registered under the Investment Company Act of 1940, Grayscale’s ETHE and ETH are structured as ETPs with different investor protections and disclosure requirements. GSOL, still traded over-the-counter, is awaiting regulatory approval to go on sale, creating uncertainty over its long-term status and oversight. Future policy changes or stricter SEC enforcement could further complicate the model or limit holdings within regulated funds.
Operationally, risks such as validator performance, rollback events, and downtime persist. Balancing liquidity with staking locks and ensuring fair and transparent distribution of rewards among shareholders adds even more complexity to fund management.
Market adoption poses another challenge. It needs to be seen how staking-enabled ETPs perform when competing with Ether ETFs.
Decentralization issues are also important. Institutional staking can improve control of validators, granting large funds outsized influence over the governance and network security of the underlying blockchains. This would go against the fundamental principles of decentralization.
How Grayscale ETPs Are Transforming Crypto From Price Tracker To Income Asset
Grayscale’s staking-enabled ETPs have had a significant impact on Wall Street and the broader crypto ecosystem. It connects blockchain-based yield to regulated financial products, transforming crypto ETPs from simple price tracking tools into income-generating assets. The initiative marks a key advancement in institutional adoption. Regulated staking on Ethereum and Solana could attract substantial new capital to these networks while serving as a model for products linked to other PoS blockchains or tokenized assets.
At the network level, institutional staking could improve the security and stability of the protocol. However, this could raise concerns about centralization if large funds dominate validator roles. This could affect returns and the balance of governance. Grayscale’s staking-enabled ETPs will shape future funds, influencing standards for transparency, risk disclosure, taxation, and investor protection.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.
