Cboe Aims for SEC Approval to Launch Staking in Ethereum ETF
The Chicago Board Options Exchange (Cboe) has taken a significant step by filing a request with the U.S. Securities and Exchange Commission (SEC) to introduce staking capabilities for the 21Shares Core Ethereum ETF (CETH). If approved, this would be a groundbreaking move, marking the first instance of an Ethereum ETF in the U.S. that includes staking, allowing investors to earn additional returns from their investments.
Key Takeaways
- Cboe has filed a Form 19b-4 with the SEC to amend the structure of the 21Shares Core Ethereum ETF.
- The proposed staking mechanism, termed "point-and-click staking," would allow Ethereum to remain securely in custody while participating in staking.
- Staking rewards would be treated as income for the fund and distributed among investors, similar to dividends in traditional equity ETFs.
- Following the announcement, Ethereum's price surged by over 12% but has since shown signs of volatility.
- The SEC has historically been cautious about allowing staking in ETFs, but recent leadership changes may influence the decision.
Cboe's Application Details
Cboe's application seeks to amend the structure of the previously named ARK 21Shares Ethereum ETF to include staking of its Ethereum holdings. This innovative approach aims to ensure that Ethereum remains securely in custody while participating in the network’s staking mechanism.
The staking rewards, which would be treated as income for the fund, would be distributed among investors, providing a passive income stream akin to dividends in traditional equity ETFs. According to the filing, not staking the Trust’s Ether would mean waiving the right to earn additional Ethereum, an opportunity that would otherwise go untapped.
By allowing the Trust to stake its Ether, the ETF aims to better track the total returns associated with holding Ether, thus benefiting its investors.
Market Reaction to the Announcement
Following the announcement of the staking application, Ethereum (ETH) experienced a notable price increase, jumping over 12%. The price rose from a low of $2,565 to an intraday peak of $2,790. However, the cryptocurrency has struggled to maintain this surge, retreating to approximately $2,678.78 at the time of reporting.
The Relative Strength Index (RSI) indicator also reflected this volatility, initially rising to around 60 before dropping to approximately 51.23. While the RSI suggests there is still potential for ETH to rise before entering the overbought region, sustaining a bullish trend may be challenging given the recent bearish movements since reaching a high of $3,742 in January 2025.
Regulatory Landscape and Future Prospects
Historically, the SEC has been cautious about integrating staking into ETFs due to concerns over securities laws. However, recent changes in SEC leadership, including the establishment of a new crypto task force led by pro-crypto Commissioner Hester Peirce, have renewed optimism among market participants regarding the approval of this proposal.
Bloomberg ETF analyst James Seyffart has expressed that this could be the first ETF to gain SEC approval for staking, although he remains cautious due to ongoing regulatory uncertainties. The SEC has up to 240 days (approximately eight months) to review and decide on this application, with a final deadline expected around the end of October 2025.
As the cryptocurrency market continues to evolve, the outcome of Cboe's application could set a significant precedent for the future of crypto ETFs in the United States.