Nasdaq Seeks SEC Approval to Add Staking to ETH ETF

Key Takeaways:

• Nasdaq filed an SEC application on behalf of BlackRock to add staking capabilities to the iShares Ethereum ETF
• The move follows SEC guidance classifying staking rewards as earned income rather than securities transactions
• Staked ETH supply reached an all-time high of over 36 million tokens, representing 29% of circulating supply
• Institutional demand for ETH continues growing with strong ETF inflows and corporate treasury adoption
  

Institutional Staking Enters Traditional Finance

The Nasdaq stock exchange submitted an application with the US Securities and Exchange Commission (SEC) on behalf of BlackRock to add staking functionality to the asset manager’s iShares Ethereum exchange-traded fund (ETF). This development represents a significant step toward bridging traditional finance with decentralized blockchain rewards.

If approved, the enhanced fund would provide investors with exposure to staking rewards generated by using the underlying Ethereum as collateral security for the network’s proof-of-stake consensus mechanism. This feature has been highly anticipated by traditional financial institutions and asset managers seeking yield-generating opportunities in the cryptocurrency space.

Regulatory Clarity Opens New Opportunities

The application follows crucial regulatory guidance released by the SEC in May, which classified staking rewards earned from validation services on proof-of-stake blockchain networks as earned income rather than securities transactions subject to capital gains tax. This classification provides much-needed clarity for institutional investors considering staking strategies.

The SEC’s guidance effectively opened doors for institutional investors to earn yield on their ETH holdings, addressing a major requirement for traditional finance institutions that must generate income or cash flow for shareholders. This regulatory framework creates a pathway for institutional adoption of staking rewards within compliant investment vehicles.

Ethereum’s Growing Institutional Appeal

Corporate treasury adoption of Ethereum continues accelerating, with companies acquiring 540,000 ETH worth $1.6 billion at current market prices in recent months for their corporate reserves. This institutional buying pressure reflects growing confidence in Ethereum’s long-term value proposition.

The hybrid nature of Ethereum appeals to treasury strategists seeking alternatives to passive storage solutions. As one industry executive noted, “Ethereum starts to look like a hybrid between tech equity and digital currency,” making it attractive for sophisticated institutional investors looking beyond traditional asset classes.

Record-Breaking Staking Metrics

Ethereum’s staking infrastructure reached new milestones in recent months, with the amount of staked ETH hitting an all-time high of 36,036,981 tokens in July. This represents over 29% of the total circulating supply, demonstrating strong network security participation and validator confidence.

The previous record was set in June when 28% of circulating supply was dedicated to network security through staking. This consistent growth in staked supply indicates institutional and retail confidence in Ethereum’s proof-of-stake mechanism and long-term network stability.

Strong ETF Performance Drives Adoption

Capital flows into Ethereum investment vehicles showed remarkable strength, with positive inflows for 11 out of the last 12 trading days according to investment tracking data. Wednesday alone saw over $726 million flowing into Ethereum ETFs, indicating robust institutional demand.

This performance marks a significant improvement from earlier periods when macroeconomic uncertainties led to flight-to-safety behavior away from risk assets. The recent positive momentum suggests growing institutional comfort with Ethereum exposure through regulated investment vehicles.

Strategic Foundation Initiatives

The Ethereum Foundation has prioritized attracting institutional interest through strategic initiatives, including backing the creation of Etherealize, a specialized marketing firm focused on exposing institutional investors to the layer-1 smart contract network. This targeted approach demonstrates the ecosystem’s commitment to traditional finance integration.

These efforts complement the technical developments and regulatory clarity that make Ethereum increasingly attractive to institutional investors seeking exposure to blockchain technology and decentralized finance opportunities through familiar investment structures.