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The Ethereum ETFs pave the way for wider institutional adoption, but remain incomplete. For Robbie Mitchnick from BlackRock, their main drawback lies in the absence of staking, a pillar of yield on Ethereum. This lack could limit their competitiveness against direct investment strategies, which calls into question their ability to meet the expectations of professional investors.
A mixed success despite massive adoption
The Ethereum ETF from BlackRock quickly established itself as a major player in the market, with 7 billion dollars in assets under management since its launch.
This enthusiasm illustrates the appeal of institutions for a product that facilitates access to Ethereum while eliminating the custody and security constraints associated with crypto. In just a few months, Ethereum ETFs recorded 2.5 billion dollars in net inflows, confirming the growing interest of professional investors in this asset class.
However, this positive momentum masks signs of fatigue. For the past 11 days, Ethereum ETFs have recorded 358 million dollars in net outflows, a trend that coincides with a more uncertain market climate and Ethereum’s underperformance compared to Bitcoin.
Robbie Mitchnick mentions a key factor at the Digital Asset Summit 2025 from March 18 to 20, 2025, in New York City: the absence of yield via staking. “A staking yield is an essential component of return on investment in this space,” he stated.
Currently, the Ethereum ETFs do not allow investors to benefit from these passive incomes, which could hinder their competitiveness against available alternatives in the market.
Institutional investors see several limitations in the current structure of Ethereum ETFs:
- An absence of staking: unlike native ETH holders, ETF investors cannot benefit from the passive yields associated with staking, which range between 2% and 7% per year;
- Management fees: ETFs involve management costs that individual ETH holders do not have to bear, which can reduce their attractiveness;
- Recent capital outflows: despite a good start, the market recorded a net withdrawal of 358 million dollars in less than two weeks, illustrating a profit-taking or questioning their relevance;
- The competition from alternative strategies: other investment vehicles, such as crypto yield products or institutional staking platforms, may offer better financial prospects to investors.
Thus, the future of Ethereum ETFs will depend on their ability to evolve towards a more competitive structure and remain compliant with current regulations.
The staking challenge: between regulatory obstacles and risks for investors
Integrating staking into an Ethereum ETF is not just a simple administrative decision. As Mitchnick pointed out, several regulatory and technical obstacles make this option complex to implement.
“It’s not as simple as a green light from regulation,” he explained. He emphasized that the issue involved “structural and compliance challenges” to resolve before being able to integrate this functionality.
Staking, introduced in December 2020 with Ethereum’s transition to Proof-of-Stake, represents a colossal market, with 85 billion dollars in deposits, or 25% of the circulating supply. The yield generated by this activity ranges from 2% to 7% per year, a major financial asset for crypto investors.
However, this strategy also carries specific risks, notably slashing, a penalty applied to validators who do not comply with network rules. This uncertainty could deter some institutional investors, who are reluctant to expose themselves to a model where their funds could be penalized in case of mismanagement of validator nodes.
Joseph Lubin, co-founder of Ethereum, highlights that:
The answer could lie in a narrative tailored to institutional investors. Rather than focusing discussions on technology and the complexity of the network, he advocates for an approach centered on concrete use cases, such as asset tokenization, decentralized identities, and decentralized finance.
While waiting for advancements on staking, Ethereum ETFs will thus have to rely on these narratives to attract investors and justify their relevance compared to other more profitable financial vehicles.
If BlackRock and other market players wish to enhance the attractiveness of Ethereum ETFs, they will have to find a way to integrate staking without compromising the security and compliance of the product. The question is even more strategic as institutional investors seek yield placements, and the lack of staking could limit the long-term interest in crypto ETFs.
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Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
