The largest asset manager in the world, BlackRock, has proposed to the U.S. Securities and Exchange Commission (SEC) to permit staking within Ethereum Exchange-Traded Funds (ETFs), which is a revolutionary step for the cryptocurrency market. 

@BlackRock meets @SECGov Crypto Task Force to discuss:

Staking in crypto ETPs
Securities tokenization

BlackRock pushes for Ether ETF staking & eyes tokenized funds like its $2.9B BUIDL#BlackRock #SEC #Ethereum #ETF #Crypto pic.twitter.com/tpg9tdxV4P

— Crypto News (CoinGape) (@CoinGapeMedia) May 10, 2025

All eyes on Ethereum ETF staking

This proposal has the potential to change the crypto investment landscape by turning Ethereum ETFs into yield-generating assets similar to bonds.

To allow the creation and redemption of ETF shares using ETH rather than USD, BlackRock is proposing to amend its S-1 filing. Using BlackRock’s $2.9 billion BUIDL fund, a tokenized fund that was introduced in March 2024 and concentrates on conventional assets like U.S. Treasury bills (T-bills) on the Ethereum network, this change seeks to combine staking and tokenization tactics. 

The BUIDL fund is a prime example of BlackRock’s overarching plan to integrate decentralized systems with traditional finance, with Ethereum serving as a key component of this development.

If permitted, staking in Ethereum ETFs could yield roughly 3.2% annually, per market research. This potential return is expected to attract significant institutional investment in Ethereum, giving investors the chance to benefit from both capital growth and passive income. 

The market has already priced it in as investors await the SEC’s decision; over the past seven days, ETH has increased by nearly 40%, outpacing Bitcoin and other notable cryptocurrencies.

Source: CoinGecko

SEC turns positive fueling more ETFs proposal

The SEC has historically regarded staking as a potential unregistered security under the Howey Test, a legal framework used to determine whether an asset qualifies as an investment contract. Staking is specifically prohibited at launch for Ethereum Spot ETFs, which were approved by the SEC in May 2024. This has generated controversy in the financial community and has been a significant barrier to staking integration into ETFs. 

A more crypto-friendly SEC in 2025 appears to be examining these restrictions and potentially paving the way for regulatory approval, based on updates on SEC.gov.

In a March 2025 interview with CNBC, Robert Mitchnick, head of digital assets at BlackRock, highlighted the revolutionary potential of staking for Ether ETFs.

“Approval of this feature could significantly boost investor interest,” he said, “even though Ethereum ETFs have seen lackluster demand since their July 2024 debut, largely due to the absence of staking.” 

Mitchnick said, “An ETF has been a compelling vehicle for holding Bitcoin, but it’s less perfect for ETH today without staking.” He also emphasized the need for regulatory clarity to fully realize Ethereum’s potential in institutional portfolios.

The Ether ETF staking proposal has ramifications that go beyond the price of Ethereum. By allowing staking in ETFs, cryptocurrency assets could be reframed as instruments for both income generation and capital appreciation, bringing them closer to conventional Wall Street financial products. 

Read more: SEC Boosts Bitcoin and ETF Altcoins by PoW Compliance

This change could usher in a new era for cryptocurrencies, bringing them closer to mainstream financial integration and away from their decentralized roots. The cryptocurrency market is keeping a close eye on the SEC’s deliberations, with Ethereum possibly spearheading the push for a hybridized financial future.

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