- The NYSE has filed an application with the SEC to list the Bitwise Ethereum ETF that would include staking features.
- The proposed ETF would deliver Ethereum staking rewards without requiring investors to manage wallets or validators.
- The ETF would face risks such as market manipulation; the SEC’s decision could influence future crypto ETF approvals.
The New York Stock Exchange (NYSE) submitted an application to the U.S. Securities and Exchange Commission (SEC) on March 20, 2025, at 12:21 PM PDT to list and trade shares of the Bitwise Ethereum ETF (ETHW) with staking rewards.
This filing under the SEC’s 19b-4 process seeks to modify the existing Bitwise Ethereum ETF, originally approved on May 23, 2024, to permit staking of Ethereum (ETH) held by the trust.
If approved, the ETF could become a groundbreaking U.S.-listed product that combines traditional investment vehicles with cryptocurrency staking, potentially broadening access to Ethereum’s blockchain reward mechanism for mainstream investors.
What is staking?
Staking is a central component of Ethereum’s Proof-of-Stake consensus, which replaced the energy-intensive Proof-of-Work model in 2022. In Proof-of-Stake, participants lock up a minimum amount of ETH—commonly 32 ETH per validator—to help validate transactions and secure the network.
In return, stakers earn rewards, typically in the range of 3–5% annually. While staking strengthens the Ethereum ecosystem, it requires technical knowledge and direct management of validators and keys, which can deter many potential participants.
How the proposed Ethereum ETF would work
The proposed Bitwise Ethereum ETF with staking aims to address that barrier by embedding staking within a regulated, exchange-traded fund structure. Bitwise, as sponsor of the ETF, would stake a portion of the trust’s ETH through authorized staking providers such as custodian banks or their affiliated entities.
This arrangement is designed to keep the staked ETH secure and liquid, ensuring assets remain available for investor redemptions.
Unlike some staking models the SEC has raised concerns about, the ETF plans to avoid “delegated staking” or “staking-as-a-service” arrangements that could conflict with regulators’ expectations. The structure is intended to align with regulatory preferences to improve the ETF’s chances of approval.
Benefits for investors
For investors, the ETF could change how they access and benefit from Ethereum. By delivering staking rewards through a familiar investment vehicle, the NYSE-listed ETF eliminates the need for individual investors to manage wallets or run validator software.
Investors could potentially gain exposure to both ETH price movements and staking yields within a daily-liquid, exchange-traded structure—offering greater flexibility than the lock-up periods commonly associated with direct staking.
This accessibility could attract both institutional and retail investors, increase demand for ETH, and exert upward pressure on market prices.
Regulatory challenges and risks
Despite its potential, the proposal faces significant hurdles. The SEC has taken a cautious stance on crypto products and frequently cites risks such as market manipulation, fraud, and investor harm.
Regulators are likely to scrutinize how staking might affect market stability and whether Bitwise can adequately protect investors and maintain fair, orderly markets.
Operational risks also exist: severe penalties for validator misbehavior, downtime, or technical failures can reduce staking returns, while balancing staked and unstaked ETH within a liquid ETF introduces additional complexity. Bitwise will need to address these concerns convincingly to secure approval.
Possible implications of the SEC’s decision
The SEC’s ruling on this application could carry wide-reaching implications for both crypto and traditional finance. Approval would mark a significant milestone and could pave the way for ETFs that incorporate staking for other Proof-of-Stake networks, such as Solana or Cardano.
An approval would also signal growing regulatory acceptance and help further integrate cryptocurrencies into mainstream investment channels.
Conversely, a denial could reinforce regulatory caution and delay the integration of staking and similar crypto-native features into traditional financial products.