SEC’s Crypto Task Force Discusses Ethereum Staking in ETFs

In a major development for the cryptocurrency industry, the SEC’s newly formed Crypto Task Force met with Jito Labs and Multicoin Capital to discuss staking in Ethereum Trust Products (ETPs). This could mark a potential regulatory shift under the Trump administration, fostering a more accommodating stance on crypto and decentralized finance (DeFi).

With the market closely watching for SEC policy changes, this discussion has sparked excitement and speculation. Could staking soon be integrated into Ethereum ETFs, opening new investment opportunities for institutions?

1. Background: The SEC’s Evolving Stance on Crypto

New Leadership, New Policies?

Under former SEC Chair Gary Gensler, the regulatory agency took a restrictive stance on crypto, often forcing issuers to exclude staking from ETF applications. Concerns ranged from:

Liquidity issues related to asset lock-up periods.
Tax implications for staked assets.
Legal classification of staking rewards as securities.

However, 2025 has ushered in a new regulatory landscape. With Mark Uyeda as Acting Chair and Hester Peirce leading the SEC’s Crypto Task Force, there’s a clear shift toward collaborating with industry leaders instead of relying on enforcement-driven crackdowns.

The Importance of Staking in Crypto

Staking is a key component of Proof-of-Stake (PoS) blockchains like Ethereum and Solana, allowing token holders to:

Secure the network.
Earn rewards for validating transactions.
Increase blockchain efficiency and decentralization.

If Ethereum ETFs incorporate staking, investors could benefit from passive yield generation—similar to dividend-paying stocks.

2. The Meeting: SEC Engages with Jito Labs and Multicoin Capital

Who Was Involved?

On February 5, 2025, representatives from Jito Labs and Multicoin Capital met with the SEC’s Crypto Task Force to discuss the inclusion of staking in Ethereum ETFs.

Key Participants:

Jito Labs: A leader in Ethereum staking and liquid staking solutions.
Multicoin Capital: A top crypto investment firm with a strong focus on PoS networks.
SEC Crypto Task Force: Led by Commissioner Hester Peirce, who has been an advocate for clearer, fairer crypto regulations.

Main Discussion Points

Integrating Staking into ETFs – How can staking be incorporated into regulated financial products?
Balancing Liquidity & Yield – Can ETFs allow staking while ensuring instant liquidity for investors?
Regulatory Classification – How should staking rewards be legally defined in an ETF structure?

Two Proposed Staking Models for ETFs

Jito Labs and Multicoin Capital proposed two approaches for including staking in Ethereum ETFs:

✅ 1. Service Provider Model

ETFs would stake a portion of their assets through third-party validators (like Jito Labs).
Staked ETH would earn rewards while maintaining liquidity for redemptions.
This would mirror dividend models in traditional stock markets.

✅ 2. Liquid Staking Token (LST) Model

ETFs would hold liquid staking tokens (LSTs) like JitoSOL, allowing investors to trade staked ETH freely.
Investors could redeem their staked ETH without worrying about lock-up periods.
This model aligns staking with traditional finance principles, increasing its appeal to institutions.

These discussions signal a potential breakthrough, as staking has previously been excluded from ETFs due to liquidity concerns.

3. Regulatory and Market Implications

A Shift Towards Crypto-Friendly Policies?

This meeting suggests that the SEC is reconsidering its approach to crypto regulation, potentially allowing staking-enabled ETFs in the near future.

Key Reasons This Matters:

More Investor Opportunities: If approved, staking ETFs would provide a new way for institutions to earn yield on Ethereum investments.
Regulatory Clarity: Could set a precedent for how staking is treated under U.S. securities law.
Boosting Institutional Adoption: Institutional players hesitant to stake ETH due to legal uncertainty could now participate safely.

Market Response: Bullish Sentiment on Ethereum?

Following the meeting, ETF filings for staking-enabled Ethereum products surged.

The New York Stock Exchange (NYSE) filed a proposal to include staking in Grayscale’s Ethereum ETF.
Cboe BZX Exchange followed suit with 21Shares Core Ethereum ETF applications.

If staking-enabled ETFs gain SEC approval, Ethereum’s investment appeal could skyrocket—potentially mirroring the surge seen after Bitcoin ETF approvals.

4. What’s Next for Staking in Ethereum ETFs?

Potential Outcomes from the SEC

Approval of Staking ETFs – If the SEC gives the green light, Ethereum staking could become a mainstream financial product, attracting institutional capital.
Further Public Consultations – The SEC may seek additional feedback before making a final decision.
New Staking Regulations – Expect new guidelines clarifying tax treatment and legal status of staking rewards.

How Will This Impact Ethereum?

Higher Staking Participation: More ETH could be locked in staking, reducing circulating supply.
Price Impact: Greater institutional demand could push ETH’s price higher.
Ethereum vs. Bitcoin Debate: Could Ethereum ETFs eventually outperform Bitcoin ETFs due to staking yield?

Long-term, this move could reinforce Ethereum’s dominance in DeFi and Web3 infrastructure.

5. CryptoLiveLeak’s Role in Covering These Developments

At CryptoLiveLeak, we strive to:

✅ Break down complex regulatory developments for crypto investors.
✅ Provide timely insights on SEC policies shaping the market.
✅ Highlight how new regulations impact institutional adoption of digital assets.

With Ethereum ETFs possibly integrating staking, we’ll be tracking every development in real-time.