According to a report by The Block, S&P Global Ratings analysts pointed out that the approval of the proposed US Ethereum spot ETF, which plans to include staking operations, may increase Ethereum’s concentration risk.
Analysts Andrew O’Neill and Alexandre Birry from S&P stated in a report released on Tuesday (19th) that they predict the US Securities and Exchange Commission (SEC) could approve an Ethereum spot ETF as early as May this year, which is the first deadline for such funds to be approved. Several companies, including BlackRock and Fidelity, have applied for an Ethereum spot ETF. Some of these applicant institutions, particularly Ark Invest and Franklin Templeton, are also seeking additional returns through staking the underlying asset (Ethereum).
According to Dune Analytics, the decentralized liquidity staking protocol Lido is currently the largest Ethereum staking platform, followed by the cryptocurrency exchange Coinbase. According to S&P analysts, it is unlikely that Ethereum spot ETFs will choose decentralized protocols like Lido for staking. Instead, they may opt for institutional-grade cryptocurrency custody solutions. The analysts pointed out that the impact on concentration will depend on whether the issuers spread their staked ETH across multiple custodians.
Related report: “SEC Delays Invesco Ethereum Spot ETF Application Again; Analysts: Not Surprising, May is the Key!”