Key takeaways

• Grayscale has bridged traditional finance and decentralized crypto by launching the first publicly traded staking investment vehicle.

• Its staking-enabled ETPs allow investors to earn blockchain rewards without running validator nodes or managing complex technical and custody risks.

• Grayscale’s Ether and Solana ETPs are the first in the US to combine spot crypto exposure with staking rewards, paying yields through the fund’s NAV or direct payouts.

• These products face operational challenges, such as validator performance issues and liquidity lock-ups, as well as regulatory and centralization risks linked to institutional staking.

Wall Street and the crypto world have long operated in separate spaces. While Wall Street was defined by traditional finance and clear regulatory norms, the crypto industry evolved around decentralized systems and shifting regulations. That divide is now narrowing, thanks to the launch of the first publicly traded investment vehicle dedicated to staking cryptocurrency.

Launched by Grayscale Investments, one of the largest digital asset managers, this staking-enabled exchange-traded product (ETP) signals a new phase in crypto’s maturation and integration with traditional finance. It’s more than a fund; it’s a bridge providing traditional investors a regulated pathway to tap into the growth potential of crypto staking.

This article discusses what crypto staking is, what has prevented greater institutional participation and how Grayscale has encouraged the institutionalization of crypto investment. It also highlights regulatory and market changes surrounding staking and explains how Grayscale’s spot crypto ETPs deliver staking yields to investors. Finally, it outlines the risks associated with staking funds and shows how Grayscale’s ETPs have shifted crypto from a price-tracking asset to an income-generating one.

Crypto staking and institutional barriers

Crypto staking involves committing digital assets like Ether (ETH) or Solana (SOL) to help secure and validate transactions on proof-of-stake (PoS) blockchains. In return, participants earn rewards — similar in concept to earning interest — for supporting network operations.

Unlike Bitcoin’s 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 computing power. This design makes them far more energy-efficient and accessible to a wider range of participants.

In general, both retail and institutional investors continue to focus on buying and holding tokens for price gains rather than staking them. Operating validator nodes requires substantial capital, technical know-how 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 US Bitcoin futures exchange-traded fund (ETF), the ProShares Bitcoin Strategy ETF (BITO), launched on Oct. 19, 2021, and traded more than $1 billion in volume on its first day.

Grayscale’s role in crypto institutionalization

Grayscale has played a central role in the institutionalization of crypto. Founded in 2013, it has grown into one of the world’s largest digital asset investment platforms, managing over $35 billion in assets. It has now launched staking-enabled products that bring blockchain yield mechanics into Wall Street’s traditional framework.

By offering regulated and user-friendly investment products, Grayscale allows investors to gain exposure to cryptocurrencies without the challenges of managing wallets, operating nodes or dealing with validator risks. Through staking-enabled offerings like the Grayscale Ethereum Trust (ETHE) and Grayscale Solana Trust (GSOL), Grayscale has integrated the yield-generating features of blockchain networks with the regulatory and custodial 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 turned staking from a complex, retail-oriented process into a professional investment opportunity.

Did you know? After years of rejections, the US approved its first spot Bitcoin (BTC) ETFs in January 2024 — a major milestone in Wall Street’s acceptance of crypto.

The turning point: Regulatory and market shifts

Grayscale’s introduction of staking-enabled funds marks a key milestone shaped by evolving oversight and growing market competition. The US Securities and Exchange Commission issued guidance for crypto ETPs in May 2025, clarifying that certain custodial staking activities may operate within existing securities laws when managed through regulated custodians and transparent structures. This development has eased earlier barriers that prevented ETFs from earning onchain rewards.

Meanwhile, competition has intensified as major players such as BlackRock and Fidelity have entered the crypto ETF arena, driving innovation. In response, Grayscale rolled out staking-enabled ETPs that blend yield generation with traditional fund frameworks. To enhance investor trust, it launched educational initiatives such as “Staking 101: Secure the Blockchain, Earn Rewards” to promote transparency and understanding.

Did you know? In 2025, Ether ETFs began allowing onchain staking, letting investors earn yield without ever touching a crypto wallet.

How Grayscale’s spot crypto ETPs are delivering staking yield to investors

Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Mini Trust (ETH) are spot Ether ETPs that now support onchain staking. Grayscale Solana Trust (GSOL) has also enabled staking while trading over the counter. Together, these offerings are the first US-listed products to combine spot crypto exposure with staking rewards.

Each fund features a unique reward structure. ETHE pays staking rewards directly to investors, while ETH and GSOL incorporate rewards into the fund’s net asset value (NAV), gradually impacting share price. After deductions for custodian and sponsor fees, investors receive a net yield from validator rewards.

Operationally, Grayscale uses institutional custodians and a diversified network of validator providers for passive staking. This configuration helps manage risks like slashing or downtime while supporting liquidity. Clear disclosures, reporting and adherence to regulatory frameworks enhance investor confidence.

Grayscale staked 32,000 ETH (about $150 million) a day after it enabled staking for its Ether ETPs, making it the first US crypto fund issuer to offer staking-based passive income via US-listed spot products.

Risks and criticisms of Grayscale’s staking funds

Regulatory uncertainty remains a key issue for staking-enabled products. Unlike fully registered ETFs under the Investment Company Act of 1940, Grayscale’s ETHE and ETH are structured as ETPs with different investor protections and disclosure requirements. GSOL, still traded over the counter, is awaiting regulatory approval for uplisting, creating uncertainty about its long-term status and oversight. Future policy changes or stricter SEC enforcement could further complicate the model or limit staking within regulated funds.

Operationally, risks such as validator performance, slashing events and downtime persist. Balancing liquidity with staking lock-ups and ensuring fair, transparent distribution of rewards among shareholders adds further complexity to fund management.

Market adoption poses another challenge. It needs to be seen how staking-enabled ETPs perform when competing with Ether ETFs.

Decentralization concerns are also significant. Institutional staking may enhance validator control, granting large funds outsized influence over governance and network security of the underlying blockchains. This would be against the core principles of decentralization.

How Grayscale’s ETPs transform crypto from price tracker to income asset

Grayscale’s staking-enabled ETPs have had a significant impact on Wall Street and the broader crypto ecosystem. It connects blockchain-based yield with regulated financial products, turning crypto ETPs from simple price trackers into income-generating assets. The initiative marks a key advance in institutional adoption. Regulated staking on Ethereum and Solana could draw substantial new capital to these networks while acting as a model for products linked to other PoS blockchains or tokenized assets.

At the network level, institutional staking could enhance security and protocol stability. However, it may spark concerns about centralization if large funds dominate validator roles. This could affect yields and governance balance. Grayscale’s staking-enabled ETPs will shape upcoming funds, influencing standards for transparency, risk disclosures, taxation and investor safeguards.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.