Grayscale is moving to change how its Ethereum and Solana staking ETFs handle rewards. The asset manager plans to amend its Ethereum Staking ETF (ETHE) and Solana Staking ETF (GSOL) to convert staking rewards into cash and distribute those proceeds to shareholders at least quarterly. The update was relayed by Wu Blockchain, citing analysis from The Filing Onchain.
What the proposal changes
Right now, both ETFs generate staking rewards in the native crypto — ETH or SOL. Under the proposed amendments, the trusts would convert those rewards into cash before sending them out. Shareholders would get a cash distribution at least once every three months, instead of holding the staked tokens directly.
The exact mechanics of the conversion — how often the trust sells, which execution method it uses — aren't spelled out yet. But the core shift is clear: income becomes cash, not more crypto.
Why shareholders might care
Cash distributions are simpler for most investors. No need to track cost basis on small, recurring crypto deposits. No extra tax forms for staking rewards that arrive in kind. For institutional holders, cash might be easier to book and report.
But there's a trade-off. Staking rewards in the original asset compound over time. If the trust sells immediately, shareholders lose the upside of those tokens if the price rises. The timing of the conversion matters — and the filing doesn't say exactly when the trust would sell.
The amendments are proposed, not yet approved. Grayscale will need to file the paperwork with the SEC and likely get a green light before executing the change. Neither the SEC nor Grayscale has commented publicly on the timeline.
Wu Blockchain flagged the development on X, pointing to The Filing Onchain's analysis. That's the only source of the news so far — no official press release from Grayscale as of this week.
The move comes as staking ETFs are still a relatively new category. The SEC approved the first spot Ethereum ETFs with staking features earlier this year, and Solana staking products followed soon after. Cash distributions could become a standard way to handle rewards, if this proposal goes through.
