Grayscale to distribute staking rewards as cash for three crypto ETFs

Grayscale has amended the structures of three of its crypto exchange-traded products to convert staking rewards into recurring cash payouts for investors. According to regulatory filings submitted to the U.S. Securities and Exchange Commission (SEC), the Grayscale Ethereum Staking ETF (ETHE), Grayscale Solana Staking ETF (GSOL), and Grayscale Avalanche Staking ETF (GAVA) are now required to sell earned staking rewards and distribute the net proceeds to shareholders.

The new rules establish a mandatory minimum frequency for these conversions of at least once per quarter, though the trusts currently intend to make distributions on a monthly basis. This mechanism ensures that the principal holdings of the funds remain intact while transforming accumulated staking rewards into tangible income for holders.

This change will create a recurring market sell flow for the reward tokens as they are converted to cash. As of mid-year data, the Ethereum fund held approximately $1.22 billion in total assets, with nearly $1 billion in staked ETH. The Solana fund reported roughly $101 million in assets, while the Avalanche fund reported approximately $4.27 million.