Wall Street is giving crypto ETF investors another reason to stay: the yield on their holdings.
On Thursday, asset management giant BlackRock launched the Stacked Ethereum Trust ETF (ETHB), designed to give investors exposure to Ethereum while potentially generating income by taking part in the fund’s holdings.
Staking involves staking tokens to help validate and secure the Ethereum network, earning rewards in return.
“It’s a little bit like thinking about getting a dividend from an equity holding,” said Jay Jacobs, head of U.S. equity ETFs at BlackRock.
The passive income potential differentiates the product from previous crypto exchange-traded funds, such as the Bitcoin Trust ETF (IBIT) and the iShares Ethereum Trust ETF (ETHA), which primarily track the price of digital assets.
Strategists note that Ethereum as a whole currently produces approximately 2.5% to 3% in annual yield. That puts it above the S&P 500’s ( SPY ) dividend yield of around 1.1%, but below the benchmark U.S. 10-year Treasury’s ( ^TNX ) yield of around 4.2%.
BlackRock aims to take between 70% and 95% of the fund and distribute it monthly.
“We’ve heard from a variety of customers and investors that they want an option to invest in Ethereum that also allows them to participate in the rewards associated with Ethereum,” Jacobs said.
As tokenization of real-world assets on blockchains such as Ethereum grows, staking has become an important tool, adding a new dimension to how digital assets are returned. It also changes the way investors approach cryptocurrency exposure.
The stablecoin GENIUS Act last year, along with pending legislation in Congress, helped expand cryptocurrency and blockchain technologies.
“As the market has evolved, it’s become something that people definitely want to offer and are able to offer now that the regulatory environment has changed,” said David Greider, a partner at digital asset-focused investment firm Finale Capital.
More ETFs offering attractive yields are expected to emerge. On Thursday, Grayscale also launched its Avalanche Stocking ETF (GAVA). It provides exposure to AVAX (AVAX-USD), the main token of the Avalanche network, while participating in the network’s staking process.
The company activated participation in its grayscale Ethereum Staking ETF (ETHE) last year.
The ETF distributed its first dividend to shareholders in January, paying them $0.083178 per share. The payout marked the first time that a US-listed space crypto ETF has passed dividend payouts directly to investors.
