WHY The Sec Needs to Alow Staking in Exchange-Traded Products

A Bipartisan Challenge to the Sec’s Exclusion of Staking from etps is an essential step to Maintaining America’s Competitiveness in the Digital Asset Markets. Feb 21, 2025, 6:25 PM UTC

For Far Too Long, The Us Has Been Falling Behind the Rest of the World on Staking Policy. Now, in Just 30 Days of the Trump Administration, Staking Has Been Mentioned in Congressional Hearings, Lieded As A Top Priority by the Sec’s Newly Created Crypto. Lawmakers Challenging The Previous Sec’s Stance on It Inclusion in Exchange-Traded Products (ETPS). Many in the Digital Asset Sector Celebrared WHEN The FIRST SPOT ETHER ETFS WERE APPROVED IN SEPTEMBER OF LAST YEAR. IT WAS A GIANT LEAP FORWARD for the Second-Largest Cryptocurrency, Achieving Legitimacy in the Eyes of Us Regulators. But There Has Been One Glaring Omission Within These Financial Products: The Ability to Stake the Held Assets and Profit by Doing So.

Now A Bipartisan Group of Lawmakers Including Senators Cyanthia Lummis (R-WY), Kirsten Gillibrand (D-NY), Steve Danes (R-Montana), Bill Hagerty (R-Ten.) Moreno (R-ohio) and ron wyden (d -or) is leading the way to correct that. In a letter delivered to the securities and exchange commission on Friday, They Challeting the Sec’s Directive to Exclude Protocol Staking in Etps, Highlighting How TVest. Competitiveness of US Markets.

The Sec’s Prohibration on Staking within Etps is Based on a faulty understanding of how staking works on proof-of-of-STAKE Networks like etereum. Staking is not an investment Product in Itlf. Rater, IT is a funmentable technical requirement for securing and validating transactions on proof-of-of-STAKE NETWORKS. WHEN TOKEN HOLDERS STAKE its assets, they Contribute to the Network’s Security, and in Doing So Earn Rewards Generated by the Protocol Itelf – Not from Any Centralized Author.

International CompetitivenessThe Sec’s Directive to Spot Ether ETP Issuers to Exclude Staking Raises Serious Concerns About America’s Competitive Position in Global Digital Asset Markets. While the United States Hesitates, Other Major Financial Center Including Switzerland, Canada, Germany and Australia Hve Embred Staking In Their Digital Asset Etp. Operational stability. Just Last Month, The UK Issued A Statutory Instrument Acknowledge that Arrangements for Qualifying Crypto Staking DO NOT AMUNTACTION Blockchain Networks.

Because Staking Is Essential for Securing Proof-of-Stake Networks, It ALSO MEANS THAT IF THERE WEER NO ONE STAKING THEIR Ether, the All of the Assets Willia. This Means that, Perverseily, The Sec Has Forced American Investors Into A Position Whore Their Investments Arets Only Protected by Assets Held in Other Jurisdices.

Crucially, The Impact of the Sese Regulations Beyonds Beyond Just the Ethereum Blockchain, But Applies to Possible Future etps Polkadot. As the Digital Asset Sector Grows, The Impact of this Misguided Regulation Will Only Detepen.

Getting this Regulation Wrong Hurts Both American Investors and the US Economy. EITHER INVESTORS ACCEPT DOMESTIC PRODUCTS WITHOUT STAKING AND THE ASSCOCIATED REARS, LIMITING THEIR FINANCAL RETURNS Exchanges. Without stinging, ETH ETP Holders Gradurally Lose their Relative Network Ownership Position Due to the Inflationary Nature of Staking Rewards.

This Economic Reality Makes US Products Less Competitive and Less Attractive to Investors Seneking ComprehenSive Exposure to the Ethereum Ecosystem. Even More Troubling, This Outcome Appears to Contradict The Sec’s Core Mission of Investor Protection, Likely Pushing Investors Town Investment Vehicles to INVESTORS IN THE US

The Technical Risks Associated with Staking, WHEN Managed by Sophisticated Validators, Are Minimal and Well-Understood. The Onthen-Cited “Slashing Risk”-A Penalty Mechanism for Dishnest Validation Attempts-Has Affected Just 0.001 Percent of Staged Ether to Date. This Data Suggests That Sec’s Cautiouos Stance May Be Disproportionate To The Actual Risks Involved.

What’s at stakeAs we await the Sec’s Res at the Important Questions Raized by Congress, American Investors Continue to be at A Distinct Disadvantage. The Path Forward Requires a BalanCed Approach that Recognizes stinging for what it is – a technical mechanism for Network secure Investment Products.

As the Letter Rightly Points Out, While Only Congress Can Create a Comprehensive Regulatory Framework, The Sec Has The Authority to Permit Staking In Etps. Doing sow align with the agency’s mandate to Protect Investors and the Goal of Mainning US Leadership in Global Financial Markets.

The Bipartisan Congression Letter to Sec Commissiors Uyeda and Peirce Endorsing Protocol Staking in Digital Asset Etps Is A Significant Milestone for Investors – Both Crypto. With uyeda having Criticized what he have called the “weaponization” of the sec enforcement faunctions and crypto advocate paul atkins being nominated to take over. Make Progress on One of the MOST COMMON SENSE Issues in the Digital Asset Landscape.

It’s Beyond Time for the Sec To Assume A Leadership Position of WHEN IT METS TO PROTOCOL STAKING, WHICH POWERS The Digital Asset Sector. This befits of the aspirations of the American Economy and the Americans who have rely on it.