- BlackRock and Coinbase will take an 18% cut of staking revenue from ETHB.
- It is well-positioned to become the largest Ethereum ETF on the market.
BlackRock and Coinbase will take an 18% cut of the staking revenue generated by BlackRock’s forthcoming Ethereum exchange-traded fund, ETHB.
The revelation came in a document filed with the securities and exchange commission Tuesday.
BlackRock, the world’s largest asset manager, dominates the market for crypto exchange-traded products. Its Ethereum ETF, ETHA, sports more than $9.1 billion in assets under management, according to DefiLlama data. Grayscale’s ETHE sits in a distant second, holding Ether worth $2.3 billion.
ETHB is well-placed to become the largest Ethereum ETF. Unlike its predecessor, it would generate staking yield, which on Tuesday was estimated at 2.8% annualised.
The SEC approved Ethereum ETFs early last year, but those products did not include staking rewards. In May, the SEC issued guidance that clarified that certain staking products aren’t securities, paving the way for staking ETFs.
ETHB will share 82% of its staking rewards with investors. The other 18% will be split between BlackRock, Coinbase — the ETF’s prime execution agent — and
“This arrangement creates a financial incentive for the Sponsor to maximize the amount of Ether staked by the Trust,” the filing reads.
But ETHB will only stake between 70% and 95% of its Ether under management, in order to ensure it can honour investors’ redemption requests.
Staking an “excessive” share of the fund’s Ether could make it difficult to honour those redemption requests, “potentially causing the Shares to trade at significant premiums or discounts to NAV.”
While ETFs give US investors a familiar way to invest in crypto — a fact that fueled Bitcoin’s 2024 rally — some in the industry have been wary of large asset managers’ growing clout.
The same week that BlackRock first detailed its plans for a staked Ethereum ETF, Ethereum co-founder Vitalik Buterin warned that a high concentration of Ethereum ownership on Wall Street could distort the blockchain’s governance and create centralised chokepoints.
BlackRock wouldn’t be the first asset manager to introduce a staked Ethereum ETF.
Grayscale’s Ethereum ETFs, ETHE and ETH, both generate yield via staking. VanEck, like BlackRock, has filed to introduce a staked Ethereum ETF.
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.
