The potential approval of staking in U.S.-listed spot Ether exchange-traded funds (ETFs) may significantly reshape Ethereum’s role in institutional finance. According to leading industry analysts and investment professionals, allowing staking in Ether ETFs would not only increase returns but also attract a wave of institutional capital that could challenge Bitcoin’s dominance in the ETF space.

So far, major issuers have submitted multiple applications to the U.S. Securities and Exchange Commission (SEC) requesting approval to integrate staking into their Ethereum-based funds. Recent developments, including the SEC’s acknowledgement of Nasdaq’s request to enable staking in BlackRock’s iShares Ethereum ETF, suggest that approval could be on the horizon.

Key to Attracting Institutional Investors

Yield is a top priority for institutional investors particularly pension funds and asset managers, who often seek predictable income over volatile capital gains. The ability to stake Ether through regulated ETFs could make Ethereum far more appealing to these investors.

Ryan McMillin, Chief Investment Officer at Merkle Tree Capital, highlighted that Ethereum’s staking rewards, combined with its broader growth potential, offer a unique opportunity. He explained that while Bitcoin functions as a “digital gold,” Ethereum acts as “stablecoin infrastructure” and can now deliver income through staking.

McMillin believes that a 3–5% yield on top of Ethereum’s capital appreciation could position ETH ETFs as a strong portfolio addition. “It’s the type of asset that offers diversification and income, rare in the crypto space,” he said.

High-Yield Arbitrage May Drive Inflows

Markus Thielen, Head of Research at 10x Research, shared insights into how staking could unlock new strategies for sophisticated investors. He pointed out that institutional players already engage in “basis trades” between spot Ether ETFs and futures, which currently offer a 7% annualised return.

With staking added, this return could jump to 10%, unleveraged. Thielen estimates that with 2–3x leverage, returns could hit 20–30% annually. “This could mark a monumental shift in how capital flows into Ethereum,” he said, predicting a surge in demand for Ether ETFs and greater activity in Ethereum options markets.

Such strategies, which blend relatively low risk with attractive returns, could pull more hedge funds and institutional players into Ethereum-based products.

A Gateway to Onchain Participation

Beyond the financial upside, staking-enabled ETFs also provide something new: a regulated, secure way to earn onchain yield without managing crypto wallets or private keys. For many institutions, this has been a key barrier to entry.

Hank Huang, CEO of Kronos Research, stressed that Ether ETFs offering staking rewards represent a turning point. “It flips the switch on demand,” he said. “Institutions can now access both the asset’s growth and staking income through traditional finance rails.”

He added that this would improve liquidity and drive broader onchain activity. According to Huang, the best ETFs will offer not just yield but also flexible exit options, setting a “new gold standard” for institutional crypto exposure.

Ethereum’s Moment to Shine

If the SEC approves staking for spot Ether ETFs, the market could see a structural transformation. The combination of yield, accessibility, and asset growth potential makes these ETFs more than just another crypto product, they become a powerful tool for portfolio management, risk-adjusted returns, and broader ecosystem participation.

In comparison to Bitcoin ETFs, which offer no native yield, Ether ETFs with staking could shift investor preferences, especially among institutions seeking income and innovation in digital assets. As regulatory clarity improves, staking-enabled Ethereum ETFs may soon become one of the most sought-after instruments in both traditional and digital finance.