The addition of staking could boost %Ethereum (CRYPTO: $ETH) exchange-traded funds (ETFs), says Robert Mitchnick, head of digital assets at %BlackRock (NYSE: $BLK).
Speaking at the Digital Asset Summit in New York, Mitchnick acknowledged that interest in Ethereum ETFs has been weak since they launched last summer.
He blamed the inability to earn a staking yield on the funds for the poor performance of Ethereum ETFs.
“A staking yield is a meaningful part of how you can generate investment return in this space,” said Mitchnick.
Staking is a way for investors to earn passive yield on their crypto holdings by locking tokens up on the network for a set period.
Staking enables investors to put their crypto to work if they’re not planning to sell it anytime soon. Currently, staking isn’t available for spot ETH or %Bitcoin (CRYPTO: $BTC) ETFs.
To date, the U.S. Securities and Exchange Commission (SEC) has viewed staking services as potential unregistered securities under the Howey Test that is used to determine whether an asset is an investment contract and therefore a security.
However, Mitchnick said he is optimistic about the addition of staking under a crypto friendly SEC.
Ethereum has been one of the most battered cryptocurrencies in recent months and is down about 40% this year.
In fact, Ethereum (ETH), the second largest %Cryptocurrency by market capitalization, is on track for its weakest first-quarter performance since its inception in 2015.
BlackRock is the issuer of the iShares Ethereum Trust ETF (ETHA). It’s down 43% on the year.
