Wall Street is giving crypto ETF investors another reason to stay: a yield on their holdings.
On Thursday, asset management giant BlackRock launched the Staked Ethereum Trust ETF (ETHB), designed to give investors exposure to ethereum while potentially generating income by staking part of the fund’s holdings.
Staking involves locking up the tokens to help validate and secure the Ethereum network, earning rewards in return.
“It’s somewhat akin to thinking about receiving a dividend from owning an equity,” said Jay Jacobs, US head of Equity ETFs at BlackRock.
The potential for passive income differentiates the product from earlier crypto exchange-traded funds, such as the Bitcoin Trust ETF (IBIT) and the iShares Ethereum Trust ETF (ETHA), which primarily track the price of digital assets.
Strategists note that fully staked ethereum currently generates roughly 2.5% to 3% in annual yield. That puts it above the S&P 500’s (SPY) roughly 1.1% dividend yield, but below the roughly 4.2% yield on the benchmark 10-year US Treasury (^TNX).
BlackRock aims to stake between 70% and 95% of the fund’s holdings and make distributions on a monthly basis.
“We’ve heard from various different clients and investors that they would like an option to be able to invest in ethereum that also gives them the possibility of participating in the staking rewards associated with ethereum,” said Jacobs.
As the tokenization of real-world assets on blockchains like Ethereum surges, staking has become a critical tool, adding a new dimension to how digital assets generate returns. It also reshapes the way investors approach cryptocurrency exposure.
The stablecoin GENIUS Act last year, along with pending legislation in Congress, helped usher in greater adoption of cryptocurrencies and blockchain technologies.
“As the market is maturing, it has become something that people definitely want to offer and have been able to offer now that the regulatory environment has changed,” said David Grider, partner at Finality Capital, a digital-asset focused investment firm.
More ETFs offering attractive yields are expected to emerge. On Thursday, Grayscale also launched its Avalanche Staking ETF (GAVA). It gives exposure to AVAX (AVAX-USD), the native token of the Avalanche network, while participating in the network’s staking process.
The firm enabled staking on its Grayscale Ethereum Staking ETF (ETHE) last year.
The ETF distributed its first staking rewards to shareholders in January, paying them $0.083178 per share. The payout marked the first time a US-listed spot crypto ETF passed staking profits directly to investors.
