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Ethereum ETF Needs Staking Functionality
The market sentiment towards Ethereum (ETH) has been overly pessimistic.
Ethereum ETF Needs Staking Functionality
Since its launch in July 2024, the market response to Ethereum exchange-traded funds (ETFs) has been lukewarm. Robert Mitchnick, Head of Digital Assets at BlackRock, recently stated that the situation could change if regulatory hurdles that hinder its development are resolved.
According to CNBC, Robert Mitchnick pointed out during the Digital Assets Summit held in New York City on March 20 that, compared to the remarkable growth of Bitcoin ETFs, the performance of Ethereum ETFs is generally perceived as “mediocre.” He termed this a misunderstanding but admitted that the lack of staking yield is one of the main limiting factors. He stated:
“Ethereum ETFs clearly have the potential for further evolution. Holding Bitcoin in ETF form has proven to be highly attractive to various investors, but for Ethereum, the current lack of staking functionality is evidently not ideal. Staking yield is a significant way to generate investment returns in this space, and all Ethereum ETFs launched so far lack this functionality.”
However, addressing this issue is not straightforward. Robert Mitchnick explained:
“This is not a particularly simple issue; it’s not a matter of a new government giving a green light and everything takes off immediately. It involves many quite complex challenges that need to be resolved, but if these hurdles can be overcome, the activity of Ethereum ETFs will significantly increase.”
A newly established cryptocurrency task force will kick off a roundtable discussion on March 22, focusing on the definition of the securities attributes of digital assets, which could bring a breakthrough for the staking functionality of Ethereum ETFs.
Ethereum has recently underperformed, with a decline of over 40% year-to-date, hindered by a chaotic market narrative, a decline in revenue after technical upgrades, and intensified competition from Solana. Standard Chartered Bank even downgraded its price target for Ethereum by more than half this week. However, Robert Mitchnick believes that the market’s level of pessimism may be overdone. He stated:
“Ethereum is simply a story of technological innovation on the surface, but deeply, it is a bet on blockchain adoption and innovation. We emphasize three key use cases to our clients: tokenization, stablecoin adoption, and decentralized finance. This requires ongoing education, and progress will take time.”