- BlackRock and Coinbase will split an 18% cut of the staking revenue from the new ETHB Ethereum ETF.
- The ETF is positioned to become the largest of its kind by allowing investors to earn staking yield, unlike its predecessor.
- To ensure liquidity for redemptions, the fund will stake only 70% to 95% of its Ether holdings.
BlackRock, the world’s largest asset manager, and crypto exchange Coinbase will take an 18% cut of the staking revenue from their forthcoming Ethereum ETF, ETHB, according to a Tuesday filing with the SEC. Consequently, the new fund is well-placed to become the largest Ethereum ETF by also generating staking yield for investors, estimated at 2.8% annually.
The SEC approved the first Ethereum ETFs early last year, but those products notably excluded staking rewards. However, new guidance issued in May clarified that certain staking products are not securities, thereby paving the way for these yield-generating funds.
ETHB will share 82% of its staking rewards directly with investors. “This arrangement creates a financial incentive for the Sponsor to maximize the amount of Ether staked by the Trust,” the official filing explicitly states.
Nevertheless, the fund will only stake between 70% and 95% of its managed Ether. This crucial measure ensures it can honor investor redemption requests and avoid significant trading premiums or discounts.
While ETFs provide a familiar investment vehicle, some industry figures express concern over Wall Street’s growing influence. In fact, Ethereum co-founder Vitalik Buterin recently warned that concentrated ownership could distort blockchain governance.
Meanwhile, BlackRock is not alone in this new market. Grayscale’s existing Ethereum ETFs, ETHE and ETH, both generate yield via staking, and VanEck has also filed to introduce a similar product.
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