Crypto ETF Staking Under SEC Review After Jito Labs, Multicoin Talks
Nidhi Kolhapur14 Feb 20254 min read
The U.S. Securities and Exchange Commission (SEC) is taking a closer look at whether staking should be part of crypto exchange-traded products (ETPs). In a recent meeting on February 5, the SEC’s Crypto Task Force, led by Commissioner hester peirce hester peirce at SEC Hester Peirce is the Commissioner of the SEC. She is known for formulating cryptocurrency regulations in the US. Hester is known as 'Crypto Mom' because she supports balanced policies that facilitate innovation and protect investors. She is also a professional lawyer and is associated with the Republican Party. With a strong background in law and economics, Hester has played a key role in creating clear regulatory frameworks for digital assets. She works closely with the Trump government and has promised clear and fair rules and regulations for cryptocurrency exchanges and blockchain projects. Quick Facts Full Name Hester Maria Peirce Birth 1970, Ohio, US Nationality American Education Case Western Reserve University, Yale University Marital Status Unmarried Net worth To be updated Peirce provides insightful directions on securities law as it applies to blockchain technology, bridging the gap between regulatory oversight and emerging crypto innovations. Her contributions continue to influence digital finance. Her work remains vital in today's digital economy. Hester Peirce - A Career Timeline 2018: Appointed SEC Commissioner, advocating balanced crypto regulation and innovation. 2019: Championed clear digital asset frameworks to protect investors and promote market transparency. 2020: Influenced key blockchain policy discussions and integrated crypto-friendly securities guidelines. 2021: Advanced regulatory clarity for decentralized finance, emphasizing fair market practices. 2022: Recognized as "Crypto Mom" for her leading role in shaping digital asset oversight. Awards & Recognization of Hester Peirce Year Recognizations Description 2018 Emerging Regulatory Leader Blockchain News - For her balanced approach to crypto regulation. 2019 Digital Finance Advocate Award By Crypto Briefing for developing innovative policies in digital finance. 2020 Crypto Regulation Visionary Awarded by Forbes for her forward-thinking stance on overseeing digital asset markets. 2021 50 over 50 Forbes list For her contributions to investment policies. 2022 "Crypto Mom" Recognition By Financial Times for her influential role in guiding the crypto regulatory landscape. Useful Links to Connect With Hester Peirce Platform Links X (formerly Twitter) Hester Peirce (@HesterPeirce) / X LinkedIn profile https://www.linkedin.com/in/hester-peirce SEC commissioner profile https://www.sec.gov/commissioner/hpeirce EntrepreneurInvestorFinanceCrypto and Blockchain Expert , sat down with Jito Labs and Multicoin Capital to discuss the idea.
If approved, this move could change how crypto ETFs function, allowing investors to earn staking rewards while holding assets.
But with the SEC’s history of caution around crypto regulations, is this the breakthrough the industry has been waiting for?
Staking Discussion Details Revealed
On February 14, the SEC published a memorandum summarizing the meeting. The discussion focused on integrating staking into crypto ETPs and was attended by Jito Labs CEO Lucas Bruder, CLO Rebecca Rettig, and Multicoin Capital Managing Partner Kyle Samani, along with General Counsel Greg Xethalis.
Why Add Staking to Crypto ETPs?
The main argument for staking in ETPs is that it could benefit investors by generating additional returns while also supporting blockchain networks.
“We believe first that including staking as a feature in certain ETPs will benefit investors, more accurately reflect the benefits of native network assets and permit issuers to support the security of the networks in which the assets operate,” the filing read.
The task force is considering two possible approaches:
- Validator-Based Staking: A portion of the fund’s assets would be staked through service providers running validators while still allowing timely redemptions.
- Liquid Staking Tokens (LSTs): Each staked asset would generate a liquid staking token that investors could trade freely.
SEC’s Concerns About Staking ETFs
Despite the potential benefits, the SEC is cautious about approving staking ETFs due to few key concerns.
“Restricting staking in cryptoasset ETPs harms (i) investors, by crippling the productivity of the underlying asset and depriving investors of potential returns, and (ii) network security, by preventing a significant portion of an asset’s circulating supply from being staked,” the meeting notes read.
As per the documents, the SEC has been cautious about staking ETFs for three main reasons. The lockup “unbonding periods” could conceivably slow down the redemption process for investors and complicate tax implications. There is also uncertainty around whether staking as a service counts as a securities transaction.
21Shares Ethereum ETF Seeks Staking Approval
Meanwhile, the CBOE BZX Exchange has filed a request (Form 19b-4) with the SEC to allow staking in the 21Shares Core Ethereum ETF. This is the first formal attempt to introduce staking in a U.S.-listed ETF, following the SEC’s approval of spot Ethereum ETFs last year.
If approved, staking in crypto ETFs could mark a major shift in the industry, offering investors new ways to earn rewards while holding digital assets. The SEC’s decision will be closely watched, as it could set a precedent for future crypto investment products.
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If the SEC gives staking the green light, crypto ETFs could enter a whole new era.
