On July 16, Nasdaq formally requested permission from the Securities and Exchange Commission (SEC) to incorporate staking functionality into BlackRock’s iShares Ethereum Trust (ETHA) exchange-traded fund (ETF).
The proposed modification would introduce a dedicated “staking” section, empowering BlackRock to engage in Ethereum (ETH) staking either directly or through reputable third-party staking service providers.
BlackRock intends to classify any staking rewards received as income. Furthermore, the company is committed to maintaining custody of staked coins in accordance with the guidelines outlined in a statement issued in May by the SEC’s Division of Corporation Finance concerning specific protocol staking activities.
Crucially, the asset management firm must also secure either a legal opinion from counsel or official guidance from the U.S. government regarding federal tax implications before initiating staking activities.
Additionally, BlackRock has stipulated that it will not provide financial support or absorb any losses resulting from slashing events or blockchain forks.
Nasdaq asserted that its proposition would enable ETHA to generate enhanced returns while adhering to well-defined safeguards designed to protect both shareholders and the integrity of the market.
Competitive Landscape and Approval Timelines
BlackRock is one of several entities vying for regulatory authorization to enable their U.S.-based spot Ethereum ETFs to accumulate protocol-based rewards.
Cboe is actively pursuing authorization on behalf of Fidelity’s FETH, Franklin Templeton’s EZET, Invesco Galaxy’s QETH, and 21shares’ CETH.
On NYSE Arca, Bitwise seeks the green light to stake the ETH held within its ETHW. Similarly, Grayscale is pursuing staking authorization for both its ETHE and mini trust.
Bloomberg ETF analyst James Seyffart commented on X regarding Nasdaq’s filing, stating that it was “about time.”
The initial deadline for previously submitted filings is slated for October, while the deadline for Nasdaq’s application concerning BlackRock’s ETF falls in early April. However, Seyffart anticipates a potentially quicker approval timeframe from the SEC.
Positive Market Sentiment Fuels Issuer Activity
U.S.-listed spot Ethereum ETFs experienced robust inflows, attracting over $726 million in net investments across nine distinct funds on July 16, representing a record-breaking day.
ETHA captured the largest share of these inflows, securing $499.2 million, a new high for daily inflows into the fund and accounting for approximately 69% of the total.
These substantial inflows potentially signal that institutional investors are increasingly optimistic about the underlying fundamentals of Ethereum, particularly its infrastructure supporting stablecoins and tokenized assets.