Author: Jamie Crawley, CoinDesk; Translated by: Tao Zhu, Golden Finance
Synder said the lack of collateral is unlikely to cause concern among institutional investors, but retail investors may feel uneasy.
This difference in requirements means that there is a potential business case for vendors to list separate, distinct products to meet the needs of both camps.
Institutional investors are unlikely to be concerned that a U.S. spot Ethereum (ETH) exchange-traded fund (ETF) does not provide additional returns by staking the underlying tokens, despite retail investors’ desire to have this feature built in, said Ophelia Snyder, co-founder of digital asset manager 21Shares.
The difference means there is a potential business reason for vendors to list separate, distinct products to meet the needs of both camps, Snyder said in an interview.
Spot Ethereum ETFs appear set to be launched in the U.S. in the near future after the Securities and Exchange Commission (SEC) approved the applicant’s key regulatory filing last month. SEC Chairman Gary Gensler told senators at a budget hearing last week that final approval will come in the coming months. Potential providers have removed collateralization clauses from their applications to avoid potential regulatory hurdles.
“One thing people forget is that the staked assets affect liquidity,” she said. “So if the Ethereum unlock period is extended to 22 days, which is indeed going to happen, how do you deal with it?”
Institutional Preference
Some believe that the lack of staking could dampen investor interest in an Ethereum ETF. JPMorgan said in late May that it expects $3 billion worth of inflows by the end of 2024. That number could double if staking were allowed.
However, Snyder believes that lack of collateral is not a problem for institutional investors. If it is, they would like to see that asset managers have an effective track record in dealing with withdrawal delays, as this requires inherent risk management, she said.
“For example, some months the unpledge period might be six days or nine days, and that range can be quite wide, and it changes your liquidity requirements,” Snyder said. “And it’s not going to jump from nine days to 22 days. It’s actually going to stretch out over time, and if you monitor those things, you can use the data inputs to manage the portfolio so that you can maximize returns while minimizing the likelihood of liquidity issues.”
21Shares may well have the institutional market in its grasp. Not only is it one of the existing spot Bitcoin ETF providers in the U.S., it is also one of the largest exchange-traded product (ETP) issuers in Europe. Its Ethereum ETPs, including staking, have about $532 million in assets under management. Its SOL equivalents are $821 million. The company is also applying for a U.S. spot Ethereum ETF. This explicitly excludes staking as a source of revenue.
There’s another issue to consider: government coffers. She said it’s unclear how staking rewards will be handled in the U.S. from a tax perspective.
“If you want institutions to play, you need to start by making things simple,” she said. Non-collateralized products are “more palatable” to an institutional audience, even if they are less popular among retail investors.
