Grayscale rewrites ETF rules to stake nearly all its $1.6B in ETH

Grayscale moves to stake nearly all idle ETH in its mini fund

@Grayscale has filed an amendment to the trust agreement governing its Ethereum Staking Mini ETF, making staking the default treatment for virtually all $ETH held by the fund. The amendment, effective on or around August 7, 2026, covers the Third Amended and Restated Declaration of Trust and Trust Agreement for the fund. The only carve-outs are for fees, redemptions, and network emergencies.

Some 161,000 ETH sit idle in the fund, which manages roughly $1.6 billion in assets. The new trust agreement aims to shrink that idle pile toward zero by making staking the default for nearly every coin the fund holds. That idle tranche represents approximately 19% of total holdings.

IRS deadline and shareholder payouts drive the timing

The timing of the amendment was not accidental. An IRS deadline for funds to qualify for the staking safe harbor expired on August 10, just four days after the amendment was signed. The IRS rules, published last November, allow crypto funds to stake without triggering fund-level tax, but rewards must flow out to shareholders at least quarterly.

The guidance, published on November 10 as Revenue Procedure 2025-31, removed a key barrier that had previously prevented regulated investment products from earning on-chain yield from proof-of-stake networks such as Ethereum.

The proposed amendment requires the trust to reduce staking consideration held by the fund to cash no less often than quarterly and to promptly distribute the cash proceeds, net of any trust expenses not assumed by the sponsor, to shareholders. Grayscale plans to make those distributions monthly in practice. The fund has earned $27.3 million in net staking rewards since activating staking in October 2025, according to SEC filings.

Grayscale's Ethereum trust was among the first U.S. spot crypto exchange-traded products to enable staking, and this latest amendment signals an effort to maximise that capability before the regulatory window closed.

Sources:
Grayscale Ethereum Staking Mini ETF Form 8-K, SEC EDGAR
161,000 Idle ETH May Soon Be Staked: What Grayscale Just Changed, Yahoo Finance
Grayscale Ethereum Staking Mini ETF Form 424B3 Prospectus Supplement, SEC EDGAR