Key takeaways
-
Grayscale has bridged traditional finance and decentralized crypto by launching the first publicly traded investment vehicle.
-
Staking-enabled staking allows investors to earn blockchain rewards without running validator nodes or managing complex technical risks and safeguards.
-
Grayscale’s Ether and Solana ETPs are the first in the US to combine spot crypto exposure with staking rewards, paying yields via NAV or direct fund payout.
-
These products face operational challenges, such as validator performance issues and liquidity lock-ups, as well as regulatory and centralization risks associated with institutional staking.
Wall Street and the crypto world have long operated in separate spaces. While Wall Street is defined by traditional finance and clear regulatory standards, the crypto industry has sprung up around decentralized systems and transfer regulations. That divide is now narrowing, thanks to the launch of the first publicly traded investment vehicle Focused on staking cryptocurrency.
Launched by Grayscale Investments. It is more than a fund; It is a bridge that gives traditional investors a regulated path to tap into the growth potential of crypto staking.
This article discusses what crypto is Staking is, what prevented more institutional participation and how Grayscale encouraged the institutionalization of crypto investment. It also highlights regulatory and market changes surrounding staking and explains how Grayscale’s crypto spots deliver staking yields to investors. Finally, it outlines the risks associated with staking funds and shows how Grayscale’s ETPs have moved crypto from a price asset to an income-generating one.
Crypto staking and institutional constraints
Crypto staking involves the creation of digital assets such as ether (Eth) or Solana (Sol) to help secure and verify 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 mining, POS systems differ. They depend on staked capital and validator performance rather than computing power. This design makes it more energy efficient and accessible to a wider range of participants.
In general, both investors and institutional investors continue to focus on buying and holding tokens for price gains rather than staking them. Running validator nodes requires a lot of capital, technical know-how and non-stop time. It also exposes participants to risks such as falling penalties and custody challenges. In addition, in many jurisdictions, the regulatory treatment of staking rewards remains unclear.
do you know The first US Bitcoin Futures Exchange-Traded Fund (ETF), the Proshares Bitcoin Strategy ETF (BITO), launched on October 19, 2021, and traded over $1 billion in volume on its first day.
Grayscale’s role in the institutionalization of crypto
Grayscale plays a key role in the institutionalization of crypto. Founded in 2013, it has grown into one of the largest digital asset investment platforms, managing more than $35 billion in assets. It has already launched staking-enabled products that bring blockchain yield mechanics to the traditional Wall Street framework.
By offering regulated and friendly investment products, Grayscale allows investors to gain exposure to cryptocurrencies without management challenges Walletsoperating nodes or dealing with validator risks. Through staking-enabled offerings such as Grayscale Ethereum Trust (ETHE) and Grayscale Solana Trust (GSOL), Grayscale integrates the building features of blockchain networks with the regulatory and custodial standards of traditional finance.
By using trusted custodians, a diverse network of validator partners and transparent reporting, Grayscale has established a safe and compliant way for investors to participate in staking. It turned staking from a complex, retail-oriented process into a professional investment opportunity.
do you know After years of denial, the US approves the first place in bitcoin (BTC) ETFS in January 2024 – a major milestone in Wall Street’s acceptance of crypto.
The turning point: regulations and market shifts
Grayscale’s introduction of staking-enabled funds marks a major 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 some custodial staking activities can operate within existing securities laws when managed through regulated custodians and transparent structures. This development has eased the previous barriers holding back ETFs Earn Onchain Rewards.
Meanwhile, competition has intensified as major players like BlackRock and Fidelity have entered the Crypto ETF Arena, driving innovation. In response, Grayscale has put together staking-enabled ETPs that blend yield generation with traditional fund frameworks. To enhance investor confidence, it has launched educational initiatives such as “Staking 101: Secure the blockchain, earn rewards” to promote transparency and understanding.
do you know In 2025, Ether ETF started allowing onchain staking, letting investors earn a yield without touching a crypto wallet.
How Grayscale’s Spot Crypto Etps deliver 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) also enables 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), which gradually affects the share price. After deductions for custodian and sponsor fees, investors receive a net yield from validator rewards.
Operationally, Grayscale uses institutional custodians and a diverse network of validator providers for passive staking. This configuration helps manage risks such as crashes or downtime during support liquidity. Clear disclosures, reporting and regulatory compliance frameworks enhance investor confidence.
Grayscale is confusing 32,000 ETH (about $150 million) A day after it enabled staking for its ETPs, making it the first US crypto fund to offer staking-based passive income through US-listed products.
Grayscale staking fund risks and criticisms
Regulatory uncertainty remains a major 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, which is still traded over the counter, is awaiting regulatory approval for the move, creating uncertainty about its long-term status and management. Future policy changes or stricter SEC enforcement may further complicate the model or limit staking within regulated funds.
Operationally, risks such as validator performance, crash events and downtime persist. Balancing liquidity with staking lock-ups and ensuring a fair, transparent distribution of rewards to shareholders adds further complexity to fund management.
Market adoption poses another challenge. It needs to be seen how staking-enabled ETPs perform when competing Ether ETF.
Decentralization concerns are also significant. Institutional staking can enhance validator control, providing significant funding-driven influence over the governance and network security of underlying blockchains. This is against the basic principles of decentralization.
How grayscale ETPs are transforming crypto from price tracker to income asset
Grayscale-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 major advance in institutional adoption. Regulated staking on Ethereum and Solana can draw significant new capital into these networks while acting as a model for products linked to other POS blockchains or tokenized assets.
At the network level, institutional staking can enhance security and protocol stability. However, this could spark concerns about centralization if large funds dominate validator roles. This can affect yields and management balances. Grayscale-powered ETPs will infuse upcoming funds, influencing standards for transparency, risk disclosure, taxation and investor protections.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.
