Cryptocurrency markets experienced a recovery in recent weeks, though gains remained insufficient to overcome earlier declines. The iShares Bitcoin Trust ETF (IBIT) declined 11.6% through the year while the iShares Ethereum Trust ETF (ETHA) fell 18.1%. Overall net inflows into US-listed spot crypto ETFs remained modest at $565 million for the year to date.
BlackRock’s iShares Staked Ethereum Trust ETF (ETHB) emerged as an unexpected standout in the Ethereum ETF category. Since its March launch, ETHB accumulated more than $650 million in inflows, substantially exceeding the $85 million that flowed into ETHA during the same period. ETHB currently held approximately $872 million in assets compared to ETHA’s $8.6 billion.
Both funds tracked ether’s price and charged identical 0.25% expense ratios, with one significant operational distinction: staking capability. ETHA maintained holdings in ether without staking, while ETHB staked between 70% and 95% of its portfolio (currently around 77%) and distributed resulting rewards to shareholders monthly as cash, with BlackRock retaining 18% of rewards as a fee. The net rewards rate stood at approximately 1.72% based on the issuer’s latest 30-day calculation. On a total return basis since ETHB began trading, it had advanced roughly 18%, marginally outperforming ETHA’s 17.5% return over the comparable period, with the staking income accounting for the performance differential.
Grayscale had previously introduced staking to its Ethereum products last October through the Grayscale Ethereum Staking ETF (ETHE) and Grayscale Ethereum Staking Mini ETF (ETH). ETHE charged 2.5% and distributed rewards as cash, while ETH charged 0.15% and reinvested rewards into the fund. Among US-listed Ethereum ETFs, ETHA remained the largest, followed by Grayscale’s ETH at $2.2 billion, Grayscale’s ETHE at $1.9 billion, and the Fidelity Ethereum Fund (FETH) at $1.4 billion.
Industry observers noted that BlackRock’s decision to create a separate staking-enabled fund rather than modify ETHA reflected concerns about varying investor preferences regarding staking’s associated risks, particularly slashing penalties. However, if staking demonstrated safety and reliability in institutional settings, yield-generating funds could eventually outperform non-staking alternatives, potentially establishing them as preferred investments. ETHB’s early inflows suggested significant investor interest in this direction.
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