How Staked ETFs Unlock Yield for Institutional Investors

Despite being approved only this year, staked ETFs continue to gain growing popularity among investors. These unique blockchain-based assets combine the benefits of staking with the protections of ETFs, enabling institutional investors to offer exposure to clients while remaining within traditional financial safeguards. Notably, recent legislative changes have made staked ETFs a reality, driving their popularity. Here’s what you need to know.

What is Staking?

Staking is a blockchain term referring to users locking their tokens into smart contracts as a way to help validate the network. Staking blockchains differ from traditional PoW (Proof-of-Work) blockchains in several key ways.

They eliminate the need for miners to compete against each other for rewards. This structure reduces financial and technical roadblocks to participation. In a PoS network, all users can secure rewards for their efforts. As such, these systems are considered far more democratic and open.

Staking networks provide more scalability as well. This added performance comes from the elimination of mining algorithms. Notably, the world’s most popular dApp network, Ethereum (ETH -1.18%), converted from a PoW to a PoS consensus mechanism as part of its performance upgrades.

What are Staked ETFs?

Staked ETFs take the concept of paper assets, which first entered the market in 1989, and add another reward-generating system into the equation. Notably, these ETFs utilize the original ETF format, allowing investors to gain exposure to markets without holding the underlying asset directly.

However, they differ in that they hold stakable network tokens. This difference enables the ETF provider to stake their tokens to secure additional revenue. Unlike private staked tokens, staked ETFs reinvest the rewards secured from their efforts back into the ETF. This strategy creates a compounding asset that continually secures rewards, increasing the original staked amount, resulting in additional payouts to ETF investors.

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Regulatory Changes Making Staked ETFs Possible

Legislative changes enabled staked ETFs to go live this year after years of debate on the matter. Specifically, the Department of the Treasury and the Internal Revenue Service (IRS) approved the Revenue Procedure 2025-31 this month.

The rule changes work in favor of staked ETFs in several ways. For one, it provides more clarity and transparency to issuers. The rulings eliminated legal ambiguity, which has left traditional investment firms unsure of the viability of the asset in the past.

Additionally, the coding helped to remove many of the tax hurdles, which has also made the concept less appealing. These maneuvers, coupled with growing demand from consumers, led institutional firms to gain confidence, resulting in several filing for staked ETF permits or upgrades recently.

Why Staked ETFs Are Attracting Investors

There are several advantages that staked ETFs bring to the market. For one, they enable investors to gain exposure to the blockchain market without direct exposure. As such, institutional investment firms can participate in the blockchain space with more confidence and protection.

These assets also create new revenue streams for investors, which help offset volatility in the market. When comparing the returns of staked ETFs to traditional versions, it’s obvious that staked options provided higher rewards without adding to the workload or management needed.

The auto reinvestment vehicle that these ETFs rely on works like compounding interest. Over time, these assets gain value as the staking amount goes up, so do the rewards. Unlike other reward vehicles, staking rewards are algorithmically determined by each network’s protocol parameters, reducing guesswork and creating predictable reward mechanics compared to discretionary yield products.

How Staked ETFs Evolved: 2022–2025

The history of staked ETFs begins in 2022. It was at this time that institutional investors started to notice a sudden uptick in investor interest regarding crypto products. As spot crypto markets remained relatively fragmented and less clearly regulated than traditional securities markets, institutions sought other vehicles that could give clients exposure without taking on the full regulatory and operational risk of holding tokens directly.

The first staked ETF filings occurred in 2022. These early filings included Polkadot ETPs and CoinShares Tezos ETFs. Notably, both filings failed to secure approval. Regulatory delays and questions would hinder the launch of a staked ETF for 3 years.

In November 2023, BlackRock and Fidelity filed their crypto ETF requests. In January 2024, BlackRock successfully launched its iShares Bitcoin Trust ETF (IBIT). This venture was extremely successful. Within a year, the asset had surpassed $70B in assets under management (AUM)

However, it wasn’t until 2025 that regulatory changes provided the necessary guidelines and a clear path to staked ETF approval. These new guidelines were immediately embraced by the investment community, with multiple firms filing for staked ETFs in quick succession.

The First Staked ETF

The REX-Osprey Solana Staking ETF (SSK) was the first asset to secure approval and launch nationwide. Its official launch date was July 2, 2025. This maneuver marked a major milestone for the blockchain investment community, ushering in a new era in ETF technology. An Ethereum version launched on September 25, 2025.

Staked ETF Updates

It’s only been a few months since staked ETFs became possible, and they are already driving an investor rush. These new era financial tools have outperformed their non-staked counterparts, with some products recording the equivalent of annualized gains exceeding 40% based on their performance over the past two months. Even more impressive is that the gains occurred during a volatile market.

Staked ETFs To Know

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There are several staked ETF options in the market today. Each of these funds provides investors a unique way to participate in securing a PoS blockchain while remaining within the protections of traditional financial regulatory frameworks.

BlackRock’s iShares Ethereum Trust (ETHA)

BlackRock launched its iShares Ethereum Trust (ETHA) on July 23, 2024. This month, the company filed for staking capabilities on their fund. The ETHA fund is one of the most prominent. It offers users low fees of around 0.25%. Impressively, the fund has $11.5B in AUM.

This popular ETF, issued by one of the world’s largest institutional investment firms, has been a massive success for both the company and its investors. The yearly returns for the ETF currently sit at around 59.57%. Notably, the asset has seen a significant increase as of late, with its price jumping 3.24% following news of the staking filing request.

Fidelity’s Fidelity Ethereum Fund (FETH)

Fidelity’s Fidelity Ethereum Fund (FETH)  went live on July 23, 2024, making it one of the first ETFs to launch. This Ether-based ETP combined institutional protections with exposure to the largest dApp ecosystem. It’s currently listed on the Chicago Board Options Exchange with $3.17B AUM.

The Grayscale Ethereum Mini Trust (ETHE)

The Grayscale Ethereum Mini Trust is another ETF that activated staking in October 2025. This popular trust gained notoriety due to its low expense ratio of 0.20% and support. Notably, Grayscale offers several ETFs currently.

The company filed to add staking capabilities this month. Notably, their request also included several other Grayscale ETFs, including the Grayscale Ethereum Trust ETF (ETHE), the Grayscale Ethereum Mini Trust ETF (ETH), and the Grayscale Solana Trust (GSOL).

Can Quicker Approvals be Expected with the New Streamlined SEC Process?

Regulators have cleared a path for ETF issuers to take their assets to market. The new guideline set out, for the first time, what requirements must be met to issue these assets. This clear path to regulatory approval has already spurred positive results from institutional investment firms who continue to request updates to their existing ETFs, or the ability to issue new assets.

This regulatory upgrade has come amidst a new pro-crypto sentiment by regulators. The SEC, in particular, has backed away from its usual delays and convoluted reasoning, which delayed previous ETFs. This year, the agency began to take a new approach designed to drive innovation within the market. The results have been positive with more investment capital flowing into the US crypto market than ever.

Networks Expected to Benefit from New Guidelines?

The approval of staked ETFs will have an interesting effect on the market. Remember, these assets center on PoS blockchains, meaning that PoS networks are set to experience a sharp uptick in demand in the coming months.

PoS blockchains can expect to see added traffic, liquidity, demand, and expanding market caps thanks to an influx of institutional investments. Networks like Ethereum, Solana, Polkadot, and many others make this list. However, Ethereum is by far the industry leader.

Ethereum Leading the Charge

While there are several staking networks that will see added traffic, Ethereum is the most likely to benefit from the changes. The Ethereum ecosystem is a thriving network of investors, developers, and crypto users spanning the globe. The project is one of the most established blockchains and continues to be a major influence in the market.

Notably, the growing popularity of staked ETFs could drive demand for ETH. Currently, around 29.4% of all ETH supply remains staked with a 99.9% validator participation rate. This situation has helped to drive demand for the asset and record gains.

You can see this growth within the Ethereum ecosystem already taking place. Since July of this year, the network has seen a spike in AUM value. Specifically, its AUM grew 177% in Q3 from $10.3B in July 2025 to $28.6B. This growth helped the network achieve a major milestone as it surpassed Bitcoin ETFs in terms of institutional inflow for the first time in history.

Future Of Ethereum Staked ETFs

As demand for Ethereum ETFs and other staked network assets grows, it will have a positive effect on their value. Already, analysts predict that demand could drive Ethereum prices to record highs in the coming months.

Ethereum Staked ETFs – A Major Upgrade Befitting the Entire Market

It’s great to see how the recent regulatory changes have sparked renewed interest in staking protocols. This latest trend will result in added value within the blockchain space and further integration of digital assets into the traditional financial markets. As such, you can expect to see more demand for Ethereum and other PoS networks moving forward.

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