Should Ethereum ETFs Include Staking? A Look at the Benefits and Risks

Abstract

This paper examines the contentious issue of whether Ethereum staking should be permitted within U.S. Securities and Exchange Commission (SEC) approved Ethereum Spot Exchange-Traded Funds (ETFs). The paper explores the mechanics and economics of staking, alongside the regulatory and legal implications. It highlights the potential benefits of staking for investors and network security, while acknowledging the associated risks and regulatory uncertainties. The paper concludes that a balanced approach, prioritizing investor protection and regulatory clarity, is essential for incorporating staking into regulated financial products.

Keywords: Ethereum, Staking, Exchange Traded Funds, Proof of Stake (PoS), Securities and Exchange Commission (SEC), Cryptocurrencies

JEL Classification: G23, G24, G28, K11, K42, O30