Staking Ether in ETFs? Franklin Crypto Fund Eyes Reward Boost
Published Date: 3/18/2025
Notice
Summary
The Cboe BZX Exchange wants to update the rules for the Franklin Crypto Index ETF so it can earn extra rewards by staking its ether holdings. This change affects investors in the ETF by potentially boosting returns without changing how the shares trade. The proposal was filed in March 2025 and is now open for public comments before it can take effect.
Analyzed Economic Effects
3 provisions identified: 2 benefits, 1 costs, 0 mixed.
ETF May Stake Its Ether Holdings
The Franklin Crypto Index ETF may stake a portion of the ether it holds and receive staking rewards that may be treated as income to the Fund. The Exchange filed this proposed change on March 10, 2025 and is soliciting comments through April 8, 2025.
Sponsor Won't Cover Slashing Losses
If the Fund's staked ether suffers a loss through "slashing," the Sponsor will not bear or subsidize that risk on behalf of the Fund. The filing states the Sponsor will not subsidize slashing losses.
Custody, Liquidity, and Reduced Theft Risk
The filing says staking will use "point-and-click" methods so the Fund's staked ether will remain in the Custodian's wallet and the Sponsor expects to maintain sufficient liquidity to satisfy redemptions. The filing also states point-and-click staking reduces the risk of theft at the node, though it does not reduce slashing risk.
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