SEC Considers Ethereum ETF Staking After Talks With BlackRock

On May 9, 2025, BlackRock held a private meeting with the U.S. Securities and Exchange Commission’s Crypto Task Force, a discussion that could influence the future of crypto investing. While these meetings are usually quiet, this one stood out. Topics like staking in ETFs, tokenized securities, and updating regulations for digital assets were discussed, showing a growing connection between traditional finance and blockchain.

The main focus was on Ethereum, specifically how to integrate its Proof-of-Stake mechanism into regulated investment products. BlackRock, known for its iShares Bitcoin Trust (IBIT), is now pushing for crypto ETFs with staking. This is a major shift from the usual passive ETF model and could allow mainstream investors to benefit from blockchain-based yields.

How Staking Could Change Ethereum ETFs?

Staking is a way to help secure Proof-of-Stake blockchains like Ethereum. Users lock up their ETH and earn rewards, similar to dividends in traditional finance. Until now, this has mostly been available to those who hold ETH directly or institutions using third-party validators. BlackRock, however, wants to change that.

In a recent meeting, BlackRock introduced a plan to include staking in ETFs. According to an SEC memo, BlackRock has outlined "considerations for ETPs with staking capabilities," suggesting that they might push for changes to the 1940 Act fund structure to accommodate staked assets. If approved, this could transform Ethereum ETFs from passive trackers into income-generating investments, marking a significant shift from the traditional ETF model that focuses solely on holding assets.

However, there are challenges. Staking raises questions about who holds custody, how rewards are taxed, and whether those rewards could be seen as securities. These are real concerns, and the SEC is reportedly looking into them closely. That’s why this meeting wasn’t just a pitch—it was a step toward setting a regulatory framework.

Robert Mitchnick, BlackRock’s Head of Digital Assets, pointed out that Ethereum ETFs without staking could be less competitive compared to directly holding ETH. If staking becomes part of the ETF design, it could change how both retail and institutional investors make decisions, turning the choice between holding ETH directly or buying an ETF from a convenience decision to one about potential returns.

Tokenization and the Path to Clear Rules

While staking drew attention, BlackRock’s proposal is broader. The firm also discussed tokenization—turning assets like Treasuries into blockchain-based financial instruments. This is already happening, with the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) as an example. It operates on Ethereum and holds tokenized U.S. Treasury securities.

For BlackRock, tokenization isn’t about speculative crypto; it’s about improving the core infrastructure of the financial system—faster settlement, clear ownership, and real-time auditing. These are practical changes that enhance how the market operates.

However, there are legal questions. BlackRock asked whether current laws, such as the 1933 and 1940 Acts, can accommodate this shift without requiring major revisions. According to the SEC memo, regulators are open to interpreting existing laws to make this work, provided investor protections are upheld.

This approach hints at a larger goal: not just staking-enabled ETFs, but a financial system that operates partially on-chain while maintaining regulatory oversight.

A Shift in Tone at the SEC

A key takeaway from these meetings is the change in tone from the SEC. Under former chair Gary Gensler, the agency took a tough stance on crypto, often acting without clear rules. Many of those cases are now stalled or dropped. Today, however, SEC leaders like Peirce and Atkins are more open to working with the industry.

Peirce has long supported frameworks that encourage innovation while protecting investors. Atkins, a supporter of well-regulated digital assets, recently said he sees "huge benefits" in responsibly integrating tokenization and staking into mainstream finance.

BlackRock’s proposals are bold but based on legal and market realities. They show that the financial industry now sees blockchain not as an experiment but as a foundation for the future. With growing support from both regulators and institutions, Ethereum ETF staking could soon become a reality.

What This Meeting Means for Ethereum ETFs?

While the SEC hasn’t made any final decisions on staking in ETFs, progress is clearly being made. BlackRock’s involvement adds credibility to the discussion, suggesting that large-scale adoption could follow if regulations are clarified.

If approved, Ethereum ETF staking could be a turning point—not just for crypto products, but for how traditional finance responds to decentralized innovation. Much will depend on how quickly the rules change. But with BlackRock pushing the agenda and a more engaged SEC, the path forward is looking more likely.