BlackRock Seeks SEC Nod for ETH Staking in ETF

The filing from BlackRock came after a recent SEC guidance that classified staking rewards as income. This spurred a wave of institutional interest in Ethereum and staking. Canary Capital also filed for a staked INJ ETF. While institutions embrace staking for yield, some crypto purists are still a bit skeptical. Meanwhile, the SEC delayed its decision on allowing in-kind redemptions for Bitwise’s spot Bitcoin and Ethereum ETFs listed on NYSE Arca. BlackRock Moves to Add ETH Staking to Its ETF BlackRock is making a major move to boost its crypto offerings by seeking approval to add staking to its iShares Ethereum (ETH) ETF. In a filing that was submitted to the US Securities and Exchange Commission (SEC) on Wednesday through the Nasdaq stock exchange, the asset management giant requested permission for its ETF to gain exposure to staking rewards. If approved, the ETF will not only offer investors access to ETH price movements, but also to income generated from staking.This is a key component of Ethereum’s proof-of-stake consensus mechanism. This development happened after a SEC guidance issued in May, which classified staking rewards as earned income rather than capital gains. The shift effectively makes staking yields more attractive to institutional investors, who often seek regular income generation over speculative price appreciation. The SEC’s stance already started to reshape how traditional finance views crypto-based income streams, and BlackRock’s move could be a huge moment in bridging conventional asset management with decentralized finance. Guidance from the SEC Institutional interest in staking surged a lot since the ruling. Ethereum treasury-focused companies collectively bought more than 540,000 ETH, which is worth around $1.6 billion at current prices, for use in corporate reserves. The total amount of staked ETH also hit historic highs. In June, 28% of the circulating ETH supply was locked into staking, and by July, that figure rose to more than 36 million ETH, or over 29% of the total supply. This is according to data from Dune Analytics . Ethereum staking stats (Source: Dune Analytics ) Market activity around Ether ETFs mirrored this trend. Farside Investors reported that Ethereum investment vehicles saw positive inflows in 11 of the last 12 trading sessions. This all culminated in a record-breaking $726 million influx on Wednesday alone. Meanwhile, the Ethereum Foundation is ramping up efforts to cater to institutional players by backing Etherealize , a new marketing agency focused on promoting Ethereum’s value proposition to traditional finance. With Ethereum increasingly being noticed as a hybrid of tech equity and digital currency, the stage is set for a deeper convergence between decentralized platforms and institutional capital. Canary Capital Files for Staked INJ ETF In other ETF-related news, Canary Capital submitted an S-1 application to the US SEC for a staked INJ ETF. The fund is designed to generate returns by accruing staking rewards through validation services using an approved staking platform. INJ is the native token of the Injective Protocol, which is a layer-1 blockchain purpose-built for decentralized finance (DeFi) applications. The filing was made after Canary Capital’s formation of a Delaware Trust in June to support the proposed ETF. Canary Capital staked INJ ETF application (Source: Nasdaq ) The filing is also part of the trend of convergence between traditional finance (TradFi) and DeFi, catalyzed by the SEC’s guidance earlier this year. This regulatory clarity encouraged more asset managers to explore staking as a viable yield-generating strategy, potentially acting as validators through delegated staking mechanisms. As such, the ETF application not only opens new investment pathways for INJ but also sheds some light on the deepening alignment between conventional financial systems and blockchain-based platforms. This merging of financial sectors caused both enthusiasm and concern. At the RWA Summit 2025 in Cannes, Nelli Zaltsman, head of blockchain payments innovation at JPMorgan’s Kinexys platform, suggested that the distinction between TradFi and DeFi could vanish over the next few years. Christopher Perkins , President of CoinFund, stated that the integration of traditional and digital finance could democratize access to exclusive investments, including private equity, previously limited to accredited investors. However, not everyone in the crypto community sees this convergence as entirely positive. Some critics argue that institutional involvement through ETFs could undermine the foundational principles of crypto. Investor Nick Rose voiced his skepticism on X by claiming that institutions treat crypto like any other asset class—managing exposure, rebalancing, and exiting positions based on risk models—rather than embracing the long-term, decentralized ethos the space was built on. He warned that while ETF inflows may look beneficial, they often come with short-term agendas and strategies misaligned with the HODL mentality that many in the crypto world hold dear. In-Kind Redemption Decision for ETFs Delayed The SEC also recently extended its decision timeline , this time regarding in-kind redemptions for Bitwise’s spot Bitcoin and Ethereum ETFs listed on NYSE Arca. According to a filing that was published on Wednesday, the SEC stated that it required more time to fully consider the proposed rule changes and the broader implications involved. While the agency did not provide a specific date for the final decision, it pointed out that the statutory limit allows for an extension up to 90 days. In-kind redemptions will enable ETF holders to redeem their shares for the underlying cryptocurrencies, Bitcoin or Ethereum, rather than for cash. This mechanism could offer tax advantages by avoiding asset liquidation and is often favored by institutional investors for its efficiency. However, the SEC’s hesitance suggests that there is still some ongoing regulatory uncertainty around operational structures involving direct crypto redemptions. The extension adds to the now growing list of delays by the SEC on crypto-related ETF matters. So far, this pattern attracted a lot of criticism from people in the industry. Grayscale’s criticism of the SEC Earlier this month, Grayscale’s legal team criticized the SEC for revisiting its earlier approval of the Digital Large Cap ETF, and accused the regulator of breaching its statutory obligation to meet decision deadlines. Grayscale argued that the SEC’s internal review process effectively suspended progress on a product that already met regulatory approval.

Source: Coinpaper