- NYSE has filed with the SEC to list Bitwise Ethereum ETF with staking features.
- The proposed ETF offers Ethereum staking rewards without a wallet or validator management.
- The ETF faces risks like manipulation; approval may shape future crypto ETFs.
The New York Stock Exchange (NYSE) on March 20, 2025, at 12:21 PM PDT filed a proposal with the US Securities and Exchange Commission (SEC) to list and trade shares of the Bitwise Ethereum ETF (ETHW) with staking rewards.
This filing, under the 19b-4 process, seeks to amend the existing Bitwise Ethereum ETF approved on May 23, 2024, to permit staking of the Ethereum (ETH) held by the Trust.
If approved, the ETF could become a pioneering product in the US, blending traditional investment vehicles with cryptocurrency staking, potentially broadening access to Ethereum’s blockchain rewards.
What is staking?
Staking is a fundamental aspect of Ethereum’s proof-of-stake system, which replaced the energy-intensive proof-of-work model in 2022. In this process, users lock up a minimum of 32 ETH to validate transactions and secure the network, earning rewards in return—typically 3-5% annually.
While staking strengthens Ethereum’s ecosystem, it requires technical expertise and direct management, barriers that deter many potential participants.
How the proposed Ethereum ETF would work
The proposed Bitwise Ethereum ETF with staking aims to bridge this gap by embedding staking within a regulated, exchange-traded fund.
Bitwise, the ETF’s sponsor, would stake a portion of the Trust’s ETH holdings through authorized staking providers, such as custodians or their affiliates. This setup would ensure the staked Ethereum remains secure and liquid, available for investor redemptions.
Unlike some staking models flagged by the SEC, the ETF would avoid “delegated staking” or “staking as a service,” aligning the proposal with regulatory expectations to enhance its approval chances.
Benefits for investors
This ETF could transform how investors engage with Ethereum.
By offering staking rewards through a familiar investment product, NYSE will eliminate the need for individuals to manage wallets or validators. Investors would gain exposure to both Ethereum’s price movements and staking yields, all within a structure traded on the NYSE with daily liquidity—a stark contrast to direct staking’s lock-up periods.
This accessibility could draw in institutional and retail investors alike, potentially increasing Ethereum demand and influencing its market price upward.
The potential regulatory challenges and risks
Despite its promise, the proposal faces hurdles. The SEC has a cautious stance on crypto products, often citing risks like market manipulation, fraud, and investor harm. The agency will likely examine how staking might affect market stability and whether Bitwise can safeguard investors.
Operational risks also loom: “slashing” penalties, imposed on validators for errors or downtime, could reduce returns, while balancing staked and unstaked Ethereum for liquidity adds complexity. Bitwise must convincingly address these concerns to win approval.
The potential impact of the SEC decision
The outcome of this filing could ripple across the crypto and financial landscapes. Approval would mark a milestone, possibly paving the way for ETFs tied to other proof-of-stake (PoS) assets like Solana or Cardano.
It could also signal growing regulatory acceptance, cementing cryptocurrency’s place in mainstream investing.
Rejection, however, might reinforce scepticism, delaying the integration of crypto features into traditional markets.
