BlackRock Lowers ETHB Staking Fee in Updated SEC Filing

• BlackRock reduced the proposed staking fee from 18% to 10% of ETH rewards in the updated ETF S-1 filing.

• The iShares Ethereum Trust plans to stake its ETH holdings to generate additional yield for the fund.

• Several firms including Fidelity Investments and Franklin Templeton are also pursuing Ethereum staking ETFs.

BlackRock updated its Ethereum staking ETF filing with the U.S. Securities and Exchange Commission, lowering the proposed staking fee to 10% of rewards. The change appeared in a revised S-1 document for the iShares Ethereum Trust (ETHB). According to James Seyffart, the previous filing listed the fee at 18% of staking rewards.

Filing Update Outlines Revised Staking Fee Structure

The revised document describes a lower fee applied to staking income generated by the fund’s Ethereum holdings. Notably, the new rate equals 10% of staking rewards. Earlier filings proposed a fee equal to 18% of gross staking income.

Therefore, the update reflects a reduction in the product’s projected cost structure. Seyffart reported the change on the X platform after reviewing the amended filing. He also noted that the fund may introduce tiered fee discounts.

Such discounts could apply when the fund reaches larger asset levels. However, the filing does not specify exact thresholds. BlackRock submitted the update through a revised S-1 registration statement. This document forms part of the regulatory approval process for exchange-traded funds.

Staking Mechanism Shapes ETF Revenue Model

The proposed ETF differs from spot funds that only hold cryptocurrency assets. Instead, it plans to participate in staking on the Ethereum network. Staking allows token holders to help secure the blockchain and validate transactions.

In return, participants receive newly issued ETH rewards. The ETF would stake its ETH holdings through a custodian. As a result the fund could generate additional income from staking rewards.

The 10% fee applies specifically to those rewards. Importantly, the fee does not apply to the fund’s total net asset value. This structure means the ETF’s revenue depends partly on network staking yields.

SEC Approval Process Continues for ETH Staking ETFs

The updated filing arrives after the SEC approved several spot Ethereum ETF 19b-4 proposals in May 2024. However, issuers must still receive effectiveness for their S-1 filings. That step allows the products to begin trading on public exchanges. Therefore, updated fee disclosures form part of the final regulatory review.

Several asset managers continue to pursue Ethereum staking ETFs. These include Fidelity Investments, Grayscale Investments, and Franklin Templeton. Earlier filings from Franklin Templeton referenced staking fees as high as 15%. Meanwhile, BlackRock’s updated structure lists a base rate of 10% on rewards.