According to Cointelegraph, Ethereum exchange-traded funds (ETFs) in the United States might soon incorporate staking yield, as suggested by a report from Bernstein Research dated December 2. The report speculates that under a potential crypto-friendly Securities and Exchange Commission (SEC) led by a new Trump administration, the approval of ETH staking yield could become a reality. Staking involves locking Ether (ETH) as collateral with a validator on the Ethereum blockchain, allowing stakers to earn ETH payouts from network fees and other rewards. However, there is a risk of losing ETH collateral if the validator misbehaves, a process known as 'slashing.' As of December 2, the annualized percentage return (APR) for staking ETH is approximately 3.1%, as reported by StakingRewards.com. Bernstein suggests that this yield could increase to 4-5% with heightened activity levels on the Ethereum network.
In July, the SEC authorized spot Ethereum ETFs to trade in the US but did not permit these funds to stake ETH for additional yield, despite requests from ETF issuers like Fidelity, 21Shares, and Franklin Templeton. With US President-elect Donald Trump expressing intentions to transform the US into a 'world’s crypto capital,' there is speculation that he might appoint crypto-friendly leaders to head financial regulatory bodies when he assumes office on January 20, 2025. This development could potentially expedite the approval of staking for Ethereum ETFs, according to Bernstein.
The report also highlights Ethereum's risk-reward profile, noting that ETH is seen as an attractive investment opportunity. This perspective is supported by increasing investor interest following a period of underperformance compared to Bitcoin (BTC). Bernstein points out that Ethereum's fundamentals appear robust, and the recent uptick in ETF inflows signals a renewed interest in the cryptocurrency. Ether investment funds have recorded net inflows of $2.2 billion in 2024, surpassing the previous record of approximately $2 billion in 2021, indicating a significant shift in sentiment towards ETH, as per CoinShares. Additionally, Matthew Sigel, VanEck’s head of digital asset research, forecasts that the Ethereum network could generate up to $66 billion in annual free cash flow by 2030, potentially driving the spot price of ETH to as high as $22,000 per token.
