BlackRock submits Ethereum staking ETF application! Wall Street replicates IBIT success story

BlackRock has submitted an S-1 registration statement to the U.S. Securities and Exchange Commission for its iShares Staked Ethereum Trust exchange-traded fund, which plans to list on Nasdaq under the ticker ETHB. If approved, this will become one of the first ETF products linked to Ethereum staking, allowing investors to indirectly earn staking rewards.

Larry Fink’s Shift: From Critic to Advocate

Larry Fink, who co-founded BlackRock in 1988, stated before the 2017 Bitcoin bull market that the cryptocurrency “shows you how much demand there is for money laundering in the world.” This comment caused quite a stir in the crypto community at the time and was seen as a sign of traditional finance elites’ disdain for emerging assets. However, in the years since, as the U.S. digital asset market has grown in size and adoption, the CEO has made increasingly optimistic statements about crypto investments.

At last week’s New York Times DealBook Summit, Fink admitted his views on crypto had undergone a “major shift,” though he still referred to Bitcoin as a “flight-to-quality asset”—meaning that investors turn to Bitcoin when they lose confidence in the traditional financial system. While this positioning remains somewhat cautious, it is a far cry from his 2017 criticism. Fink’s change of heart is not an isolated case but a reflection of Wall Street institutions collectively embracing crypto assets.

BlackRock currently manages the world’s largest spot Bitcoin ETF—iShares Bitcoin Trust (IBIT). Since its approval in early 2024, IBIT has attracted tens of billions of dollars in inflows, demonstrating strong demand from both institutional and retail investors for regulated crypto investment vehicles. This successful experience has given BlackRock confidence to promote an Ethereum staking ETF.

The Strategic Significance of an Ethereum Staking ETF

(Source: SEC)

BlackRock’s submission of an Ethereum staking ETF application marks an important upgrade in its crypto strategy. Unlike a spot ETH ETF, a staking ETF not only tracks the price of Ethereum but also provides investors with staking rewards. After Ethereum completed its “The Merge” upgrade in 2022, it transitioned from proof-of-work (PoW) to proof-of-stake (PoS), allowing holders to validate transactions and earn annualized returns by staking ETH.

Currently, Ethereum’s annualized staking yield is about 3% to 4%. While this is lower than some high-risk DeFi protocols, it is highly attractive to institutional investors seeking stable returns. A staking ETF allows investors to earn staking rewards indirectly without running their own validator nodes or locking ETH in smart contracts, significantly lowering technical barriers and security risks.

From BlackRock’s perspective, an Ethereum staking ETF can create a sustainable source of management fee income. Spot ETFs mainly rely on management fees (usually 0.2% to 0.5%), while staking ETFs can also take a percentage of staking rewards as a service fee in addition to management fees. This dual revenue model makes the product more attractive to asset management companies.

Competitive Landscape of Staking ETFs Already Taking Shape

Since the first spot Ethereum ETF was approved in May 2024, regulators have yet to approve many crypto staking funds. However, Grayscale added staking functionality to its previously approved spot ETH and mini ETH Trust funds in October, making them the first products to offer such services. Canary Capital has also submitted a similar staking fund application to the SEC, indicating rising competition in the market.

Additionally, Grayscale and Bitwise launched staking products related to Solana in July and October, respectively, showing that the staking ETF concept has extended to other PoS blockchains. These early movers provide regulatory and market validation references for BlackRock.

BlackRock’s advantage lies in its massive client base and brand influence. The success of IBIT proves that BlackRock can effectively reach traditional investors and convince them to allocate into crypto assets. If the Ethereum staking ETF is approved, BlackRock could quickly become the market leader in this space, just as it has in the spot Bitcoin ETF market.

Regulatory Approval and Market Impact Outlook

The SEC has always taken a cautious approach toward staking products. During former chairman Gary Gensler’s tenure, the agency questioned staking services, considering them potentially unregistered securities offerings. However, with the crypto-friendly Trump administration coming into power, the SEC’s leadership has changed, the regulatory environment has significantly improved, and several investigations into crypto firms have been dropped or settled.

If BlackRock’s Ethereum staking ETF is approved, it will “completely reshape the market landscape.” First, it will provide millions of traditional investors with a regulated channel to earn staking yields, potentially triggering a massive flow of funds from centralized exchanges and DeFi protocols to ETFs. Second, it will increase institutional adoption of Ethereum, as staking ETFs offer higher expected returns than spot ETFs. Third, it may prompt other asset managers to file similar applications, leading to explosive growth in staking ETFs.