BlackRock has endorsed staking Ethereum ETFs, noting that it is a good idea for investors. In a statement at the Digital Asset Summit in New York, head of crypto at the firm, Robert Mitchnick, mentioned that staking is why demands for the funds have been low.
Since its launch in July 2024, ETH ETFs have failed to reach the anticipated peak. Many expected the funds to follow the same way with BTC ETFs but things have not been so. According to Mitchnick, something is missing, that’s why patronage is low. “There’s no question it’s less perfect for ETH today without staking,” he said. “A staking yield is a meaningful part of how you can generate investment return in this space, and all the [ether] ETFs at launch did not have staking,” he said.
BlackRock launched the iShares Ethereum Trust ETF and has a tokenized money market fund, BUIDL, which started on Ethereum and has since expanded to Aptos and Polygon.
BlackRock proposes staking as a means to push Ethereum ETFs
Presently, Ethereum ETF holders have not been earning any staking rewards, unlike regular ETH investors. Staking lets investors lock their ETH on the network in exchange for yield, making it an important part of Ethereum’s value proposition. Without it, investors might not see the appeal of ETFs.
But then, Mitchnick concedes that it is not something simple. “It’s not a particularly easy problem,” Mitchnick said. “There are a lot of fairly complex challenges that have to be figured out, but if that can get figured out, then it’s going to be sort of a step change upward in terms of what we see the activity around those products is.”
One of the biggest challenges will be the SEC, because It has historically classified some staking services as unregistered securities under the Howey Test, which determines whether an asset is a security. However, the new SEC administration is taking a different approach. The agency has launched a crypto task force that will hold its first roundtable discussion on Friday to define the security status of digital assets.
Ethereum has dropped about 40% of its value this year, causing pessimism among traders. But Mitchnick feels it is not justified. “ETH … at the second-grade level is easier to define … but at the 10th-grade level is a lot harder,” he said. “Second-grade level: it’s a technology innovation story. … Beyond that, it does get a little more vast, a little more complicated. It’s about being a bet on blockchain adoption and innovation. That’s part of the thesis as we communicate it to clients,” he said.