A number of well-known Ether (ETH) exchange-traded fund (ETF) issuers, such as Ark Investments Management and Fidelity Investments, have decided to remove staking from their plans. This decision comes as a result of regulatory pressures from the United States Securities and Exchange Commission (SEC). While this strategic shift may increase the likelihood of an Ether ETF approval, it has sparked concern and debate within the crypto industry due to the importance of staking.
Staking involves locking up cryptocurrencies in order to validate transactions and earn rewards. Many investors prioritize staking and its absence in Ether ETFs could significantly impact their appeal compared to direct purchases of Ether, which offer the opportunity for staking rewards.
GSR’s senior strategist, Brian Rudick, emphasized the “immediate opportunity cost” of holding Ether through an Ether ETF that does not offer staking. The elimination of staking from Ether ETFs, which are built using the proof-of-stake (PoS) mechanism, could have broader implications for supply, network security, and decentralization as there would be less staked ETH.
One member of the X community shared their opinion on the staking concerns, suggesting that Ether ETFs were asked to remove staking due to the price difference between Ether and Bitcoin (BTC). Another member likened staking to “earning interest on your savings,” considering it falls under the “securities umbrella.”
Amid the community’s conflicting perspectives on the removal of staking from Ether ETFs, the SEC has initiated discussions with potential issuers of spot Ether ETFs. A decision is expected to be made within the next few hours. This news follows the recent approval of the Financial Innovation and Technology for the 21st Century Act, also known as FIT21, in the U.S. House of Representatives. The bill received support from 208 Republicans and 71 Democrats, while 136 voted against it.
In light of these developments, the SEC is facing a tough battle against the legal firepower of the crypto industry, akin to the clash between Godzilla and Kong.