Grayscale Switches Staking Rewards to Cash Payouts for Ethereum and Solana Holders

Grayscale is making changes to its Ethereum and Solana staking exchange-traded products (ETPs) to provide regular cash payouts to shareholders. According to a Form 8-K filing with the SEC, Grayscale plans to amend the trust agreements governing the Grayscale Solana Staking ETF (GSOL) and the Grayscale Ethereum Staking ETF (ETHE). The amendments will require each trust to convert staking rewards into cash no less often than quarterly.

The changes are designed to make it easier for traditional investors to access staking returns, eliminating the need for shareholders to hold cryptocurrency, pick validators, or manage staking operations. However, Grayscale notes that distribution amounts cannot be predicted as they will depend on staking rewards and expenses deducted by the trusts.

Grayscale has already made its first ETHE staking distribution on January 5, paying shareholders about $0.08 per share from the sale of rewards. The asset manager enabled staking for its ETH and SOL products on October 6, 2022, becoming the first US crypto fund issuer to add staking to spot crypto ETPs.

Grayscale made these changes to align with US tax guidance and maintain the funds' current tax treatment. The company is giving shareholders a 20-day notice before implementing the changes. Once the amendments take effect, Grayscale plans to update the funds to explain how regular cash payouts will work.