Staking in Crypto ETFs

Staking should potentially be added to the menu for crypto exchange-traded funds (ETFs), argued a bipartisan group of U.S. senators in a letter to the Securities and Exchange Commission (SEC) on Thursday.

Issuers of crypto ETFs had originally planned to include the staking feature in their fund offerings, but the SEC, under its past leadership, had balked at the idea. The agency, run by Chair Gary Gensler until the administration of President Donald Trump arrived last month, had previously pursued enforcement actions against firms such as Kraken, arguing that staking amounted to an unregistered securities offering.

The senators’ letter — backed by Cynthia Lummis, the Republican chair of a Senate subcommittee that focuses on digital assets — calls for reconsidering the practice, which involves locking up digital tokens to support blockchain operations in return for rewards. Supporters contend that protocol staking is key to the security of ecosystems such as Ethereum.

“We encourage the SEC to consider the potential benefit to investors from allowing protocol staking in certain digital asset exchange-traded products,” the letter to SEC Acting Chairman Mark Uyeda argued.

Other Republicans joined Lummis in the correspondence, alongside two Democrats: her usual crypto partner, Kirsten Gillibrand of New York, and Ron Wyden of Oregon.

Read More: Staking in Ethereum ETFs Might Be a Question of When, Not If