The stakes couldn't be higher.
BlackRock is expanding its Ethereum lineup and making moves to launch a new fund, the iShares Staked Ethereum Trust ETF (ETHB). The asset manager submitted an updated S-1 filing last week disclosing who will receive staking rewards from the fund, having initially submitted a proposal in December. BlackRock is already the largest Ethereum ETF provider, with its iShares Ethereum Trust ETF (ETHA) sitting at $9.1 billion in assets, and it's intending to build on that lead. The proposed launch also reflects an increasing willingness of big-name issuers to offer staked products, which some in the industry pointed out are not for everyone.
"I don't believe in staking the coins because it takes on risk for the holder," said Mike Willis, CEO of Cyber Hornet ETFs. "The minute you loan shares out or stake them, you're giving up some sort of rights on them."
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Make No Mi-stake
Spot crypto ETFs that use staking allow investors to pledge a certain amount of the currency to the platforms and blockchain networks that validate transactions. Although these types of products can seem appealing for their high rewards, Willis said, not all firms can mitigate the risk. "If there was a run on the market, and nobody could find their shares because they're all lent out, you've got an issue there," he said. "In extreme cases, [that] could come back to bite shareholders."
In BlackRock's case, Coinbase is the staking platform that will receive a cut of the rewards, while shareholders will get around 80%, according to the latest filing. BlackRock isn't the only staker on the turf, though: Just last week, Grayscale and Canary launched products staking the cryptocurrency SUI. Some of the staked products now available include:
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The Canary Staked SUI ETF (SUIS), which has attracted $23 million in its first three days of trading.
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The Rex-Osprey SOL + Staking ETF (SSK), which launched in July and has $126 million.
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The Bitwise Solana Staking ETF (BSOL), which launched in October and has $471 million.
Like Your Life Depends On It.Spot crypto products can provide a way for the "bitcoin-curious" to get into the digital asset space, Willis said. But if a client doesn't understand what they're invested in (as many with staking products don't), they can't "HODL," or hold on for dear life. "Crypto fanatics, they can hold through 70% drops because they understand the underlying tech and will buy more when it's down," Willis said. "But the general public does not understand crypto, and they can't hold through those big drops."
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