| February 19, 2025 This Change Could Transform ETFs & Reshape the Market Dear Subscriber, Crypto ETFs are poised for a game-changing breakthrough. And it could change crypto adoption and use forever. Jito Labs and Multicoin Capital set the stage earlier this month when they met with the SEC’s Crypto Task Force. Their goal? To champion the integration of staking into the existing Ethereum (ETH, “A-”) ETFs. Why? Because it would open the door for the inclusion of staking in future ETFs … like the Solana (SOL, “B”) ETF applications waiting for approval at the SEC. And that possibility could be a lucrative one for both organizations. But first, let’s take a step back to look at where crypto ETFs currently are … Where Jito Labs and Multicoin Capital want them to go … And how you can benefit. BTC Vs. ETH ETFs Bitcoin ETFs were approved in January 2024. And that news sparked a spirited rally as we saw over $2.4 billion in trading volume across the ETFs in just 24 hours. As of writing, Bitcoin ETFs have seen $110 billion in total assets. Bitcoin ETF flows $100b TNA (Source: SoSoValue). Click here to see full-sized image. When the Ethereum ETFs were approved in July 2024, many investors hoped for a repeat performance. However, their inflows have lagged significantly behind the Bitcoin ETFs from the get go. Currently, the Ethereum ETFs hold $9.9 billion in total net assets. Ethereum ETF flows $9.9b TNA (Source: SoSoValue). Click here to see full-sized image. The reason is that Bitcoin’s ETF pitch is simple… It’s digital gold. An inflation hedge. A store of value. Traditional investors immediately see its role in a portfolio. Heck, even major TradFi institutions have hopped on the Bitcoin train. Ethereum, however, has struggled to find a clear institutional narrative. The stark gap in total net assets underscores the urgency for Ethereum to introduce a competitive edge. Without staking, Ethereum ETFs lack the yield incentive that could make them more attractive to institutional capital. 3 Ways Staking Could Change Ethereum’s Fortune If the SEC were to finally get on board with staking, this could breathe some needed life into Ethereum in three major ways. Ethereum would now turn into a yield-bearing asset. Staking transforms ETH into a dividend-like investment, which is highly attractive to TradFi investors.
Ethereum could gain an edge over Bitcoin ETFs. Bitcoin ETFs offer zero yield, while a staking-enabled ETH ETF could provide passive returns.
Institutional Interest could rise and bring increased liquidity with it. Funds that were previously hesitant now have a reason to allocate to Ethereum. This is the missing piece that Ethereum needs to compete with Bitcoin ETFs. 2 Projects Champion Staking to SEC Proof-of-stake (PoS) networks — like Ethereum and Solana —have relied on staking to secure their blockchains and reward participants for years. But the SEC prohibited ETF issuers from including staking when the Ethereum ETFs were approved. At the time, regulators had concerns about liquidity. This decision put a limit on investor returns. And worse, it limited investor appeal. But now, things may be on the verge of changing thanks to Jito Labs and Multicoin. Through its Jito (JTO, Not Yet Rated) protocol, Jito Labs provides the infrastructure to “maximize the performance of the Solana blockchain and enhance validator rewards,” according to its website. In simple English, it lets Solana users stake on Jito. Meanwhile, Multicoin was an early investor in Solana, providing seed capital two years before its 2020 launch. So, they understand what’s at, well, stake. Crypto Taskforce Jito Labs meeting log (Source: SEC). Click here to see full-sized image. To be clear, Jito Labs and Multicoin Capital aren’t just advocating for staking. Rather, they’ve laid out two structured solutions that could fit within SEC guidelines while unlocking billions in institutional capital. If approved, staking-enabled ETFs could reshape Ethereum’s standing in traditional finance. This could represent a critical juncture for Ethereum, which aims to bridge the substantial gap in ETF inflows between ETH and Bitcoin (BTC). And once the door opens to staking via the Ethereum ETFs, we can expect staking on most other crypto ETFs. Including the Solana applications sitting at the SEC. But they aren’t the only two in support of the idea. In fact, adding staking to ETFs has some surprising backers … Institutions Want Staking-Enabled Ethereum ETFs! The battle for staking integration in Ethereum ETFs has already begun — and two ETF giants aren’t waiting for the SEC. Grayscale’s Staking Initiative — The New York Stock Exchange has filed with the SEC on behalf of Grayscale to enable staking within its spot Ethereum ETFs. 21Shares Ethereum ETF Proposal — Cboe, the world’s top derivatives market, has also filed for staking integration in the 21Shares Ethereum ETF. This further signalls a broader institutional push to capture staking-based yield. These filings prove that ETF issuers aren’t just waiting for the SEC to act. They’re forcing the conversation. The moment approval comes, expect a rush to integrate staking across multiple Ethereum ETFs. Now, We Wait for the SEC’s Next Move The SEC’s meeting with Jito Labs and Multicoin Capital marked a crucial step forward for Ethereum ETFs. If approved, staking could: Unlock billions in institutional investment. Strengthen Ethereum’s long-term viability, and Redefine crypto ETFs as yield-generating assets. Most importantly, this could be Ethereum’s moment to step out of Bitcoin’s shadow. That would be a boon for every crypto and dApp inside the Ethereum ecosystem. With Grayscale, 21Shares and Cboe already pushing for staking, the ETF industry is ready to move. That leaves only two questions: When will the SEC make its call? And will you be ready to make the most of it the moment it does? If you’re not sure about the latter, I encourage you to watch my colleague Juan Villaverde’s latest urgent briefing. In it, he reveals a “glitch” in the cycles his Crypto Timing Model indicates could be your moment to load up before the next rally. Best, Mark Gough | 