The Securities and Exchange Commission (SEC) is currently considering a very important proposal from Cboe BZX Exchange, Inc. How to make the proposal? By staking ETH, earning rewards, and doing it all via an Exchange Traded Fund (ETF). By March 10, 2025, the lawsuit led the agency to initiate a full-fledged environmental review. They want to ensure that it lives up to the investor protection rules established by the Securities Exchange Act. This review examines specifically Section 6(b) of the Act, which requires equitable and transparent market conduct.

Cboe BZX Exchange, Inc. is looking to get approval for a new ETF. The ETF would allow investors to stake ETH — as independent ETH holders already can — and earn rewards. The SEC should take a sober look at whether this staking mechanism really imposes investor protections that are required by law within the existing regulatory framework.

As is standard with such review processes, the SEC filed the proposal with the Federal Register for official publication. With this release, a new public comment period was opened, giving a unique opportunity for stakeholders to share their thoughts and perspectives on the issue. You only have 21 days from the date of publication to get your first comments in, so don’t delay. Don’t forget to submit your rebuttal comments during the 35-day window!

The SEC’s limited evaluation should be to make sure investors are protected. They want to make sure that the proposed staking arrangement adheres to the standards outlined in the Securities Exchange Act. The agency is still weighing the proposal’s possible harms and advantages. We appreciate that the Commission’s true aim is to arrive at a fully-informed decision that effectively protects investors while still promoting innovative developments in the digital asset sphere. The SEC has a duty to use a fine-tooth comb in examining new financial products. They want to see avoid unnecessary shocks to the market and protect investor security.