21Shares Introduces Staking to Ethereum Core ETP

21Shares, one of the world's largest issuers of cryptocurrency exchange-traded products (ETPs), has announced the addition of staking to its 21Shares Ethereum Core ETP (ETHC). From 19 November, the product will be renamed the "21Shares Ethereum Core Staking ETP" to reflect this new feature, according to an announcement.

By adding staking to ETHC, the firm aims to provide a unique opportunity to investors seeking passive income without the need to lock their assets directly on the Ethereum network. The average staking yield for Ethereum is currently reported at 2.24%, according to Coinbase data from November 17, 2024.

Ethereum staking involves locking up ETH to support the network’s security and operations, with stakers earning rewards in return. Now, ETHC holders will automatically benefit from these staking rewards, potentially offsetting management fees and offering an additional stream of income, all while keeping their investments liquid. This feature offers a streamlined and efficient way for investors to tap into Ethereum’s staking ecosystem, without the technical complexities typically associated with staking.

Hany Rashwan, co-Founder and CEO of 21Shares, emphasized the company’s continued focus on innovation: “The addition of staking to ETHC is the firm’s latest move to provide the European market with the most cutting-edge digital assets products. We are thrilled to make ETHC even more attractive for investors, helping to offset management fees while also offering the potential for additional returns through staking rewards.”

According to analyst Tom Wan, previously of 21Shares, staking Ethereum could lead to the staking of between 550k to 1.3 million ETH across various ETFs, which would help increase the overall staked ratio. This shift could also pave the way for greater liquidity in Ethereum staking, especially with future upgrades to the network that reduce withdrawal queues and slashing penalties. The staking of Ethereum via ETFs is poised to become a key differentiator in attracting institutional investors who are seeking passive income without the complexities of staking directly.

Wan also pointed out that the introduction of staking to Ethereum ETFs could eventually allow for near-100% utilization rates, especially with products like Lido’s stETH, which provide liquidity and faster withdrawal times compared to traditional staking pools. This development would help Ethereum ETFs realize their full potential and catch up with Bitcoin ETFs, which currently dominate the market.

ETHC remains 100% physically backed by Ether, providing investors with direct exposure to ETH while offering the potential for staking rewards. Listed on multiple major exchanges including the SIX Swiss Exchange, Deutsche Börse Xetra, and the London Stock Exchange, ETHC is recognized for its cost-efficiency, with management fees as low as 0.21%.

Efforts to introduce staking services for Ethereum ETPs in the United States have faced setbacks, as the US Securities and Exchange Commission (SEC) has blocked such initiatives, citing concerns over market manipulation and potential risks to investors.