Staking Features May Be Reconsidered for Ethereum ETFs After Their Launch, Says SEC Commissioner Hester Peirce

In a recent interview, US Securities and Exchange Commission (SEC) Commissioner Hester Peirce reopened the discussion of adding staking features to Ethereum ETFs (exchange-traded funds) after their upcoming launch, possibly on July 23.

The US Securities and Exchange Commission (SEC) recently approved the launch of several Ethereum exchange-traded funds (ETFs), but these products do not include staking features. However, SEC Commissioner Hester Peirce has stated that features like staking could be reconsidered for addition after the ETFs begin trading.

Peirce made these comments during an interview, where she also expressed disappointment with the difficulties encountered in the approval processes for both Bitcoin and Ethereum ETFs. She highlighted the importance of a smooth and drama-free product launch.

Peirce's comments come as several ETF issuers, including VanEck and Fidelity, had initially included provisions for staking in their applications. But it is believed that they removed this component to meet the SEC's requirements for approval of these index funds in May.

Now, with the approval of these Ethereum ETFs without staking features, Peirce seems to be leaving the door open for potential future additions based on feedback and market demand.

Benefits Of Staking In ETFs

Staking is a process where token holders earn rewards by contributing their tokens to the security of a blockchain network. In Ethereum's staking system, validators lock increments of 32 ETH to activate validators that store data, process transactions, and add new blocks to the blockchain.

By design, the requirement for validators to operate with staked tokens discourages malicious behavior that could compromise the network. The inclusion of staking in ETFs would increase the potential return on investment, as investors would be rewarded for participating in the network's consensus mechanism.

Institutional investors, retail investors, and asset managers who are familiar with staking as a mechanism may be interested in investing in these ETFs, which could lead to increased demand and inflows into the new Ethereum ETF market.

Despite the absence of staking features in the Ethereum ETF market, analysts are predicting strong demand for these ETFs in the first months of trading, with one exception.

Mixed Predictions

For example, Fundstrat's Sean Farrell anticipates net inflows of over $5 billion within the initial months of trading. Similarly, JPMorgan strategists led by Nikolaos Panigirtzoglou estimate that prospective Ether portfolios will attract a “modest” $1 billion to $3 billion in net inflows for the remainder of the year.

On the other hand, Vetle Lunde, a senior research analyst at crypto specialist K33 Research, predicts $4 billion net inflows for the Ethereum ETFs in the first five months and a substantial “supply absorption shock” that could drive up ETH's price.

However, as reported by Bitcoinist, analysts at global asset management firm Bernstein are bearish on the prospects of these new Ethereum ETFs, as they may see less demand than spot Bitcoin ETFs due to the lack of staking features.

At the time of writing, the second-largest cryptocurrency by market capitalization is trading at $3,395, down over 1.5% over the 24-hour time frame but up 9% in the past week.

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