The Nasdaq stock exchange filed an application on Wednesday with the U.S. Securities and Exchange Commission (SEC) on behalf of BlackRock for its iShares Ether (ETH) exchange-traded fund (ETF). The application seeks approval to add staking services.
If approved, the amended fund will offer investors exposure to security staking rewards generated using the underlying ETH as collateral for Ethereum’s proof-of-stake consensus mechanism.
A key factor enabling this potential expansion is guidance released by the SEC in May which classified staking rewards obtained from validation operations on proof-of-stake blockchain networks as taxable income, rather than gains from securities transactions.
This characterization is crucial for attracting institutional investors who typically aim to generate consistent returns (“yields”) for their holdings, a regular income stream that is vital for TradFi (Traditional Finance) entities.
Record institutional staking interest
“Ethereum begins to appear as a cross between tech equity and digital currency,” said Ray Youssef, CEO of finance application provider NoOnes. “This utility is attractive to treasury departments seeking active deployment beyond passive holding.”
Institutional treasury teams accumulated 540,000 ETH—worth $1.6 billion based on recent market valuations—in the past month for corporate reserve funds.
Meanwhile, Ethereum staking participation that provides security for the proof-of-stake network has hit record levels. The amount staked at the network surpasses the 36 million mark, making up over 29% of the circulating supply according to Dune Analytics.
Rising adoption is also reflected in substantial investment flows.ETF assets increased significantly during June and July after earlier performance was blunted by macroeconomic concerns and flight-to-safety pressure.
Farside Investors indicates positive capital flows into Ether-based trusts have occurred for 11 of the past 12 trading days. On Wednesday, investment into the funds reached a new record exceeding $726 million.
Projecting Ethereum’s potential to attract further conventional finance capital, the Ethereum Foundation is spearheading initiatives like partnering with Etherealize, a dedicated consultancy to institutional outreach.
