The U.S. Securities and Exchange Commission (SEC) has delayed its evaluation of Bitwise’s proposed spot Ethereum ETF featuring staking rewards, citing significant regulatory concerns.
Chief among the SEC’s reservations are perceived staking risks and challenges surrounding investor redemptions primarily linked to Ether’s lock-up periods during the staking process.
The regulator has also explicitly raised issues about validator centralization, expressing concern that reliance on a limited pool of validators could potentially compromise core blockchain decentralization principles.
This extension signifies a cautious SEC stance that may establish a key precedent impacting the future approval pathway for similar staking-enabled crypto investment products.
Market reactions have been mixed; some investors favor non-staking ETFs for their operational simplicity, while others value staking ETFs as a means to earn rewards without direct participation in blockchain mechanics.
The prolonged review period underscores the pressing need for clearer and more specific regulatory frameworks governing staking-integrated crypto exchange-traded funds.