SEC Delays Bitwise’s Ethereum ETF Staking Plan

Bitwise’s plans to incorporate Ethereum staking into its ETF have hit a roadblock as the U.S. Securities and Exchange Commission (SEC) has decided to delay its decision and conduct a new review. The proposal, which involves staking Ethereum within Bitwise’s spot ETF, is facing increased scrutiny from regulators. Although staking offers the potential for additional returns by locking up ETH to secure the blockchain, the SEC has expressed concerns about potential investor risks and conflicts of interest.

The SEC’s announcement on June 30 indicated that they would be seeking public input on the matter, reflecting their hesitation to approve staking in exchange-traded funds. The regulator is particularly focused on whether integrating staking could lead to market manipulation or inadequate investor protections.

Bitwise has emphasized that incorporating staking would not change the structure or transparency of the ETF and could potentially enhance returns for both institutional and retail investors. However, the SEC has reiterated that any updates must align with the mandate to ensure fair and orderly markets.

The public is now invited to provide feedback within a limited timeframe before the SEC makes a final decision. In the meantime, the Bitwise Ethereum ETF will continue to operate without staking features. This review process coincides with the growing prominence of staking in the ETF realm. Rex Shares CEO Gregory King recently disclosed that the firm’s Solana staking ETF is set to commence trading on July 2, indicating that the industry at large is moving forward despite regulatory caution.