Grayscale Investments announced today that it has become the first company in the United States to distribute staking rewards from a spot cryptocurrency exchange-traded product.
The Grayscale Ethereum Staking ETF (ticker: ETHE) will pay shareholders $0.083178 per share on January 6, 2026, marking a significant milestone for cryptocurrency investment products.
The payout covers staking rewards earned between October 6, 2025 and December 31, 2025. This development represents the first time a US-listed spot crypto ETP has passed staking profits directly to investors.
How Grayscale Activated Ethereum Staking
Grayscale became the first issuer to activate staking for its Ethereum products in October 2025. The company enabled staking for two products: the Grayscale Ethereum Staking ETF (ETHE) and the Grayscale Ethereum Staking Mini ETF (ETH). Both funds were renamed in January 2026 to reflect their new staking capabilities.
The staking process works through institutional custodians and third-party validator providers. These validators handle the technical requirements needed to earn rewards from the Ethereum network. When validators successfully process transactions and secure the network, they receive ETH tokens as compensation.
Source: @Grayscale
Unlike direct Ethereum holders who receive staking rewards in cryptocurrency, Grayscale’s ETF sells these earned tokens and distributes the proceeds to shareholders in US dollars. This approach simplifies tax reporting and makes the rewards accessible through traditional brokerage accounts.
What This Means for Investors
Peter Mintzberg, Chief Executive Officer of Grayscale, called the distribution “a landmark moment, not just for Grayscale, but for the entire Ethereum community and ETPs at large.” He emphasized that Grayscale is “reinforcing its role as an early leader in bringing new digital-asset capabilities into the ETP wrapper.”
The ability to earn staking rewards adds a new income stream for ETHE shareholders beyond just price appreciation of Ethereum. Staking typically generates annual yields between 3% and 5% depending on network conditions. This creates a similar dynamic to dividend-paying stocks, where investors receive periodic cash distributions.
Grayscale manages approximately $31 billion in assets across its digital asset products. The company was founded in 2013 and is headquartered in Stamford, Connecticut.
Regulatory Changes Enabled Staking Features
The path to staking-enabled ETFs required significant regulatory evolution. In September 2025, the Securities and Exchange Commission approved generic listing standards for cryptocurrency ETFs. This eliminated the requirement for individual SEC reviews of each product and accelerated launch timelines.
Then in November 2025, the US Treasury and IRS issued Revenue Procedure 2025-31, providing safe harbor rules that explicitly allowed ETFs to stake proof-of-stake assets and distribute the rewards to investors. Treasury Secretary Scott Bessent stated this guidance would “increase investor benefits, boost innovation, and keep America the global leader in digital asset and blockchain technology.”
Former SEC Chair Gary Gensler had previously instructed companies to remove staking features from crypto ETF applications. The change in regulatory stance reflects growing acceptance of cryptocurrency products in traditional finance.
Competition Heats Up in Staking ETF Market
While Grayscale was first to distribute rewards from a spot crypto ETP, other companies have also launched staking products. REX-Osprey launched the first 1940 Act registered ETF with staking on September 25, 2025. The company 21Shares also offers Ethereum ETFs with staking features.
BlackRock, the world’s largest asset manager, filed for its own staked Ethereum ETF in December 2025. The iShares Ethereum Staking Trust would stake between 70% and 90% of its holdings. However, this product is still awaiting regulatory approval.
Grayscale’s early activation gives it a first-mover advantage in capturing market share. The company has already expanded staking beyond Ethereum. In October 2025, Grayscale activated staking for its Solana Trust as well. The firm plans to extend staking capabilities to additional products, including potential offerings for Cardano and other proof-of-stake cryptocurrencies.
Understanding the Risks
Grayscale’s official filing discloses several risks associated with staking. When funds stake Ethereum, the tokens become locked and cannot be sold or transferred during the staking period. This creates illiquidity that could prevent the fund from selling during favorable market conditions.
The unstaking process also takes time. Ethereum’s protocol enforces an unbonding period of at least nine days, which can extend to fifty days during high network activity. During this waiting period, the fund may miss earning opportunities.
Technical risks include security breaches, network downtime, smart contract vulnerabilities, and validator failures. If validators misbehave or make mistakes, they can face “slashing” penalties where a portion of staked tokens is destroyed. While these risks are relatively low with professional validators, they would be reflected in the fund’s net asset value and shared by all investors.
The funds cannot stake all their Ethereum holdings because they must maintain reserves to meet daily redemptions and settlements. Industry estimates suggest funds typically stake between 50% and 70% of their assets, which reduces the overall staking yield compared to direct holders.
The Staking Revolution Continues
Grayscale’s successful distribution establishes a precedent for how cryptocurrency investment products can incorporate native blockchain features. By November 2025, Grayscale’s two Ethereum ETFs had generated $7.9 million in staking returns for investors since activation in October 2025.
The distribution also creates competitive pressure on other issuers. Future Ethereum ETF applicants will likely need staking components to remain competitive with Grayscale’s offerings. This could accelerate the adoption of staking features across the entire cryptocurrency ETF market.
As regulatory clarity continues to improve and more companies add staking capabilities, investors will have increasing options to earn yield from proof-of-stake cryptocurrencies through traditional investment products. Grayscale’s milestone today demonstrates that the infrastructure and regulatory framework now exist to make this possible at scale.