The world’s largest asset manager, BlackRock, has filed a registration application with the US Securities and Exchange Commission (SEC) for a new Ethereum ETF featuring staking functionality. The product allows investors to participate both in the price performance of Ethereum and in staking rewards through an exchange-traded fund.
The filing comes two months after Grayscale became the first issuer in early October to activate staking functions for its existing Ethereum ETFs. BlackRock, however, is taking a different path: instead of retrofitting the existing iShares Ethereum Trust (ETHA), the asset manager is launching an entirely new product. ETHA currently manages around 11 billion US dollars and will remain a pure spot product without a staking component.
According to the S-1 registration document, the new iShares Staked Ethereum Trust plans to stake between 70 and 90 percent of its Ethereum holdings under normal market conditions. Coinbase Custody Trust Company will serve as the primary custodian, with Anchorage Digital listed as an alternative for risk diversification and operational security.
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Regulatory shift under SEC Chairman Atkins
The filing marks a turning point in US regulatory policy. Under Gary Gensler, who left office in January 2025, the SEC had instructed issuers to remove staking components from their applications. The authority argued that staking services on platforms such as Kraken and Coinbase constituted unregistered securities offerings.
With the appointment of Paul Atkins as the new SEC Chairman in April 2025, the agency’s stance changed. In May 2025, the Division of Corporation Finance published a statement titled “Certain Protocol Staking Activities,” clarifying that protocol staking activities do not qualify as securities offerings under federal law. Although not a formal SEC rule, this statement created legal clarity for institutional providers.
As a result, several issuers submitted applications or modified existing products. VanEck filed an amendment in early August 2025 for its VanEck Ethereum ETF, which would allow staking under Rule 14.11(e)(4) for Commodity-Based Trust Shares. A decision by the SEC is still pending.
Dividend distribution instead of reinvestment
According to the registration document, the BlackRock trust will not operate its own staking program. Instead, validator rights will be delegated by the custodian to external staking providers. This structure is standard for institutional staking solutions and enables professional validator infrastructure without operational risk for the ETF sponsor. Ethereum staking currently generates annual yields of between 3 and 5 percent. The average yield in 2025 ranged from around 3.5 to 4.2 percent – depending on network activity and the number of active validators. Over the 180-day period ending September 2025, the average staking yield, according to the CoinDesk Composite Ether Staking Rate (CESR), was 2.98 percent.
BlackRock plans to distribute staking revenues to shareholders at least quarterly. This structure differs from Grayscale’s approach: while the Grayscale Ethereum Trust (ETHE) provides distributions for cashflow-oriented investors, the Grayscale Ethereum Mini Trust (ETH) automatically reinvests staking proceeds into the net asset value to enable a compounding effect. The choice between the two models has tax and strategic implications. Distributing ETFs generate taxable income, while accumulating products offer tax deferral benefits. For institutional investors with income mandates, regular distributions are often more attractive.
BlackRock dominates the crypto ETF market
With ETHB, BlackRock would launch its fourth crypto ETF and its second Ethereum product. The existing ETHA manages 11 billion US dollars – about 3.6 million ETH – and dominates the US market for spot Ethereum ETFs with a market share of over 60 percent. By comparison, the iShares Bitcoin Trust (IBIT) manages around 70 billion US dollars, holding 58 percent of all Bitcoin ETF assets in the United States.
The overall market for spot Ethereum ETFs currently includes nine products with combined assets of around 18 billion US dollars. Following ETHA are the Grayscale Ethereum Trust (ETHE) with 3.5 billion US dollars, the Fidelity Ethereum Fund (FETH) with 1.34 billion US dollars, the Grayscale Ethereum Mini Trust (ETH) with 1.2 billion US dollars, and smaller products from Bitwise (373 million US dollars) and VanEck (174 million US dollars).
BlackRock’s decision to launch a separate staking product rather than modifying ETHA demonstrates regulatory caution. A new product avoids legal complications with existing shareholders and creates a clear distinction between yield-oriented and pure exposure products. Grayscale became the first issuer to activate staking for ETHE and ETH in early October 2025, with both products collectively managing around 4 billion US dollars. The company uses institutional custodians such as Coinbase and a “diversified network of validator providers.” This first-mover advantage could lead to inflows, unless investors prefer to wait for BlackRock’s market entry.
Institutional investors like passive yield
Institutional demand for staking ETFs is driven by regulatory clarity and structural advantages. Ethereum staking requires technical expertise, validator infrastructure, and continuous maintenance – barriers that institutional investors can bypass through ETF structures. Coinbase Custody, as custodian for BlackRock’s ETHB, operates the largest institutional staking infrastructure with a perfect slashing history and a 99 percent uptime guarantee. The approval probability for ETHB is considered high. Grayscale has already created regulatory precedent, and the SEC under Atkins is taking a more constructive stance toward crypto products. A timeline for approval remains uncertain – the S-1 filing initiates a multi-stage review process without guaranteed authorization.
BlackRock’s track record in crypto ETFs is exceptional: IBIT and ETHA generated over 260 million US dollars in annual fees in less than two years, with IBIT contributing 218 million US dollars and ETHA 42 million US dollars. Both products charge identical management fees of 0.25 percent per year. Fees for ETHB have not yet been disclosed; they are typically set in the final prospectus.
The launch of staking ETFs could make Ethereum products more attractive than Bitcoin ETFs because they offer additional revenue streams. Analysts estimate that staking functionality could increase inflows by 15 to 30 percent – especially among institutional investors with yield mandates. The actual impact will depend on approval timing and market dynamics. With 72 crypto ETF applications currently under SEC review, the new leadership under Atkins signals a more pragmatic regulatory philosophy. Whether this attitude results in a wave of approvals will become evident in the coming months.
