United States Ethereum exchange-traded funds (ETFs) may soon feature staking yield, according to a Dec. 2 report by Bernstein Research.
“We believe, under a new Trump 2.0 crypto-friendly [Securities and Exchange Commission], ETH staking yield will likely be approved,” Berstein said.
Staking involves locking up Ether (ETH) as collateral with a validator on the Ethereum blockchain network. Stakers earn ETH payouts from network fees and other rewards but risk “slashing” — or losing ETH collateral — if the validator misbehaves.
As of Dec. 2, staking ETH yields approximately 3.1% annualized percentage returns (APR), denominated in ETH, according to StakingRewards.com.
“[W]e think ETH yield can juice up further to 4-5% at elevated activity levels” on the Ethereum blockchain network, Bernstein said.
Source: StakingRewards.com
Crypto-friendly US leadership
In July, the Securities and Exchange Commission authorized spot Ethereum ETFs to trade in the US but prohibited the funds from staking ETH for extra yield despite several requests to do so from ETF issuers, including Fidelity, 21Shares, and Franklin Templeton.
Now, US President-elect Donald Trump — who has promised to turn the US into the “world’s crypto capital” — is reportedly mulling tapping crypto-friendly leaders to head financial regulators when he begins his presidential term on Jan. 20, 2025.
This could open the door to staking being approved sooner than previously thought, Bernstein said.
Ether’s risk-reward profile
The analysts also said they see ETH as an attractive investment opportunity, citing rising investor interest after a period of underperformance relative to Bitcoin (BTC).
“Ethereum fundamentals look strong and the recent inflection in ETF inflows, indicates a solid revival of interest,” Bernstein said.
Ether investment funds have seen record net inflows of $2.2 billion in 2024, finally surpassing the cryptocurrency’s 2021 net inflow record of roughly $2 billion and reflecting “a dramatic turnaround in sentiment” for ETH, according to CoinShares.
Matthew Sigel, VanEck’s head of digital asset research, expects the Ethereum network to generate up to $66 billion in annual free cash flow by 2030, driving spot ETH’s price as high as $22,000 per token.
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