Grayscale has bridged the gap between traditional finance and decentralized cryptocurrency by launching the first publicly traded staking investment tool.
Its supported staking ETP allows investors to earn blockchain rewards without the need to run validation nodes or manage complex technical and custody risks.
Grayscale's Ethereum and Solana ETPs are the first products in the U.S. to combine exposure to spot cryptocurrencies with staking rewards, either through the fund's net asset value or direct payment of earnings.
These products face operational challenges such as validator performance issues and liquidity lock-up, as well as regulatory and centralization risks associated with institutional staking.
Wall Street and the crypto world have long operated in different realms. Wall Street is characterized by traditional finance and clear regulatory frameworks, while the crypto industry has evolved around decentralized systems and ever-changing regulations. This divide is narrowing with the launch of the first publicly traded investment tool focused on cryptocurrency staking.
The staking-supported exchange-traded product (ETP) launched by Grayscale marks a new phase of cryptocurrency maturity and integration with traditional finance. It is not just a fund; it is a bridge that provides traditional investors with a regulated way to capitalize on the growth potential of cryptocurrency staking.
This article discusses what cryptocurrency staking is, what hinders greater institutional participation, and how Grayscale encourages the institutionalization of crypto investment. It also highlights the regulatory and market changes surrounding staking and explains how Grayscale's spot crypto ETP provides staking yields to investors. Finally, it outlines the risks associated with staking funds and demonstrates how Grayscale's ETP transforms cryptocurrencies from price-tracking assets into income-generating assets.
Cryptocurrency staking involves committing digital assets like Ethereum (ETH) or Solana (SOL) to help secure and validate transactions on proof-of-stake (PoS) blockchains. In return, participants earn rewards—conceptually similar to earning interest—to support network operations.
Unlike the Bitcoin proof-of-work (PoW) model, which relies on energy-intensive mining, PoS systems operate differently. They depend on staked capital and validator performance rather than computational power. This design makes them more energy-efficient and more accessible to a broader range of participants.
Overall, retail and institutional investors continue to focus on buying and holding tokens for price appreciation rather than staking them. Operating validation nodes requires significant capital, technical expertise, and uninterrupted uptime. It also exposes participants to risks such as slashing penalties and custody challenges. Additionally, in many jurisdictions, the regulatory treatment of staking rewards remains unclear.
Did you know? The first Bitcoin futures exchange-traded fund (ETF) in the U.S., ProShares Bitcoin Strategy ETF (BITO), launched on October 19, 2021, with over $1 billion in trading volume on its first day.
Grayscale has played a central role in the institutionalization of crypto. Founded in 2013, it has grown into one of the largest digital asset investment platforms globally, managing over $35 billion in assets. It has now launched staking-supported products that bring blockchain yield mechanisms into the traditional framework of Wall Street.
By providing regulated and user-friendly investment products, Grayscale enables investors to gain exposure to cryptocurrencies without facing the challenges of managing wallets, operating nodes, or dealing with validator risks. Through staking-supported products like Grayscale Ethereum Trust (ETHE) and Grayscale Solana Trust (GSOL), Grayscale combines the yield-generating characteristics of blockchain networks with the regulatory and custody standards of traditional finance.
By using trusted custodians, a diversified network of validator partners, and transparent reporting, Grayscale has established a secure and compliant way for investors to participate in staking. It has transformed staking from a complex, retail-focused process into a professional investment opportunity.
Did you know? After multiple rejections, the U.S. approved its first spot Bitcoin (BTC) ETF in January 2024—a significant milestone for Wall Street's acceptance of cryptocurrencies.
The staking-supported fund launched by Grayscale marks a key milestone shaped by evolving regulations and increasing market competition. The U.S. Securities and Exchange Commission issued guidance on crypto ETPs in May 2025, clearly stating that certain custodial staking activities can operate under existing securities laws when managed through regulated custodians and transparent structures. This development alleviated early barriers that hindered ETFs from earning rewards on-chain.
Meanwhile, as major players like BlackRock and Fidelity enter the crypto ETF space, competition has intensified, driving innovation. In response, Grayscale launched staking-supported ETPs that combine yield generation with traditional fund frameworks. To enhance investor trust, it introduced educational programs like "Staking 101: Protecting the Blockchain, Earning Rewards" to promote transparency and understanding.
Did you know? In 2025, Ethereum ETFs began allowing on-chain staking, enabling investors to earn yields without interacting with crypto wallets.
Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Mini Trust (ETH) are spot Ethereum ETPs that now support on-chain staking. Grayscale Solana Trust (GSOL) has also enabled staking while trading over-the-counter. These products are the first publicly listed offerings in the U.S. to combine exposure to spot cryptocurrencies with staking rewards.
Each fund has a unique reward structure. ETHE directly pays staking rewards to investors, while ETH and GSOL incorporate rewards into the fund's net asset value (NAV), gradually affecting share prices. After deducting custodian and sponsor fees, investors receive net earnings from validator rewards.
Operationally, Grayscale uses institutional custodians and a diversified network of validator service providers for passive staking. This configuration helps manage risks such as slashing or downtime while supporting liquidity. Clear disclosures, reporting, and adherence to regulatory frameworks enhance investor confidence.
Within a day of enabling staking in its Ethereum ETP, Grayscale staked 32,000 ETH (approximately $150 million), becoming the first U.S. crypto fund issuer to offer passive income based on staking through a publicly listed spot product.
Regulatory uncertainty remains a key issue for staking-supported products. Unlike ETFs fully registered under the Investment Company Act of 1940, Grayscale's ETHE and ETH are structured as ETPs with different investor protection and disclosure requirements. GSOL is still trading over-the-counter and awaiting regulatory approval to elevate its listing status, creating uncertainty for its long-term position and regulation. Future policy changes or stricter SEC enforcement could further complicate this model or restrict staking within regulated funds.
Operationally, risks such as validator performance, slashing events, and downtime still exist. Balancing liquidity with staking lock-up and ensuring fair and transparent distribution of rewards among shareholders adds further complexity to fund management.
Market adoption is also a challenge. It remains to be seen how staking-supported ETPs perform in competition with Ethereum ETFs.
Decentralization issues are also significant. Institutional staking could enhance validator control, giving large funds excessive influence over the governance and security of the underlying blockchain. This would contradict the core principles of decentralization.
Grayscale's staking-supported ETPs have had a significant impact on Wall Street and the broader crypto ecosystem. They connect blockchain-based yields with regulated financial products, transforming crypto ETPs from simple price trackers into income-generating assets. This initiative marks a key advancement in institutional adoption. Regulated staking on Ethereum and Solana could attract substantial new capital to these networks while serving as a model for products related to other PoS blockchains or tokenized assets.
At the network level, institutional staking could enhance security and protocol stability. However, if large funds dominate the validator role, it could raise concerns about centralization. This could affect the balance of yields and governance. Grayscale's staking-supported ETPs will shape upcoming funds, influencing standards for transparency, risk disclosure, taxation, and investor protection.
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Original article: “Grayscale Brings Crypto Staking to Wall Street for the First Time”
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