Grayscale to Introduce Regular Cash Payouts from ETH and SOL Staking Rewards

Grayscale is planning to convert staking rewards generated by its Ether (ETH) and Solana (SOL) exchange-traded products into regular cash distributions. The asset manager announced its intentions in Form 8-K filings with the U.S. Securities and Exchange Commission (SEC), stating that it plans to amend the trust agreements governing the Grayscale Solana Staking ETF (GSOL) and the Grayscale Ethereum Staking ETF (ETHE) around August 7. These amendments will require each trust to convert staking rewards into cash no less frequently than quarterly and distribute net proceeds to shareholders. This framework aims to make staking returns more accessible to traditional investors by providing cash rewards through broker-held products, eliminating the need for shareholders to hold crypto, select validators, and manage staking operations. However, Grayscale noted that distribution amounts cannot be predicted, as they will depend on staking rewards during each period and expenses deducted by the trusts. Grayscale made its first ETHE staking distribution on January 5, paying shareholders approximately $0.08 per share from the sale of rewards. The asset manager enabled staking for its ETH and SOL products on October 6, 2025, becoming the first U.S. crypto fund issuer to add staking to spot crypto ETPs. As of the week ending July 17, ETHE had $1.22 billion in net assets, while GSOL had $101.13 million. The Ethereum fund's gross staking rewards were 2.67%, while the Solana fund's were 6.10%. Grayscale stated that these changes are designed to keep the funds compliant with IRS rules that allow them to earn staking rewards without losing their current tax treatment. The company assured that the amendments should not significantly harm shareholders but provided a 20-day notice period. Once the changes take effect, Grayscale plans to update the funds to explain how the regular cash payouts will work. Under the proposal, each trust could deduct expenses not assumed by Grayscale before making a distribution, which may include a portion of the staking rewards paid to the sponsor for arranging and facilitating the staking activities. The filings do not set a fixed distribution amount or guarantee identical payouts each quarter, stating that rewards may vary depending on the assets staked and network conditions.

This move by Grayscale could significantly impact the crypto ETF landscape, making staking rewards more liquid and accessible to a broader investor base. The regular cash distributions may also influence market sentiment, potentially driving more institutional interest into staking-focused ETPs. However, the variable nature of staking rewards could introduce volatility, requiring careful risk assessment from investors.