Grayscale completes historic debut: US Ethereum ETF distributes staking rewards for the first time, with $9.4 million in cash received. Is the battle for returns about to begin?

January 5, 2026, the world’s largest digital asset management firm Grayscale announced that its Ethereum staking ETF (ETHE) will distribute its first staking income to shareholders, totaling approximately $9.4 million. This marks the first time that on-chain staking rewards from a US-listed spot cryptocurrency exchange-traded product (ETP) are being distributed as “dividends” to traditional financial products, representing a milestone in structural significance. This move not only upgrades a simple price-tracking tool into an income-generating asset but also could trigger a new round of competition among mainstream institutions around “yield,” attracting a broader range of traditional income-focused investors into the crypto market.

Milestone Event: How Grayscale Achieved Its First “Crypto Dividend”

On January 5, 2026, Eastern Time, pioneer in the crypto asset management space Grayscale Investments released a historic announcement. The company declared that its flagship product, the Grayscale Ethereum Trust ETF (ETHE), would make its first income distribution, paying $0.083178 in cash per share. This distribution, totaling about $9.4 million, does not originate from capital gains or management fee rebates but is entirely derived from its underlying asset—Ethereum—through on-chain staking rewards. This is the first such occurrence in the history of US financial products, successfully bridging the native economic incentives of blockchain networks into a regulated traditional securities framework.

The income covers the period from October 6, 2025, to December 31, 2025. Notably, October 6, 2025, was the day Grayscale activated staking for its Ethereum products (including ETHE and Grayscale Ethereum Mini Trust ETF). Since then, the fund has staked some of its held Ethereum via its institutional-grade custodian and third-party validator service providers, beginning to accumulate network rewards. Grayscale chose a user-friendly approach for traditional investors: it sells the accumulated ETH rewards on the market and distributes the proceeds in USD cash to shareholders. This ensures that the amount of Ethereum held by the fund itself is not diluted, and shareholders receive purely “interest” income.

Grayscale CEO Peter Mintzberg described this moment as “a milestone, not only for Grayscale but for the entire Ethereum community and even the entire ETF industry.” His assessment is well justified. As of the announcement, ETHE’s trading price was about $26.47, while the underlying Ethereum price hovered around $3,299. This distribution has provided ETHE holders with an additional annualized yield boost, preliminarily validating the feasibility of the “staking + ETF” product model. Although Grayscale’s fund, established earlier and operating outside the Investment Company Act of 1940, enjoys a different regulatory structure that allowed it to implement staking first, its success undoubtedly paves the way for broader ETF compliance staking in the future.

Key Data Overview of Grayscale’s First Show

• Total Distribution: approximately $9.4 million
• Cash per Share: $0.083178
• Coverage Period: October 6, 2025 – December 31, 2025 (about 87 days)
• ETHE Trading Price at the Time: about $26.47
• Ethereum (ETH) Price at the Time: about $3,299
• Total Assets Under Management (AUM) of Grayscale: about $31 billion
• ETHE Fund Asset Size: about $4.1 billion

Structural Transformation: From Price Tool to Income-Generating Asset

Grayscale’s distribution is far more than a simple shareholder dividend. It essentially completes a “structural upgrade” of US crypto financial products. Prior to this, whether Bitcoin or Ethereum spot ETFs, their investment logic was fundamentally straightforward: investors buy into expectations of future price appreciation. The product itself functions like a sealed container tracking prices, generating no endogenous income. The introduction of staking rewards fundamentally changes this attribute. Ethereum ETFs thus transform into “interest-bearing assets” within a regulated framework, with dual potential for capital appreciation and cash flow income.

This shift will have profound impacts on investor groups. First, it greatly simplifies the process for traditional investors, especially institutional investors, to access crypto-native yields. Self-managed on-chain staking involves private key management, validator node selection, technical operations, and complex tax considerations (in the US, staking rewards may be considered taxable income upon generation). Grayscale’s cash distribution model encapsulates all these complexities within the product. For investors, they receive a clear, USD-denominated cash income, which can be treated similarly to traditional dividends or interest income for tax reporting. This “clean” income property is expected to attract a large number of pension funds, insurance companies, and income-oriented mutual funds that previously hesitated due to operational complexity and tax uncertainties.

Second, this creates a new competitive dimension for asset management firms. When all ETFs track the same asset price, competition often devolves into a low-fee “race to the bottom.” The introduction of staking income opens up a new battlefield of “yield.” Fund management capabilities will be judged not only on tracking error but also on the safety of staking strategies, node service provider choices, reward extraction and conversion timing. Ultimately, the “total return” (price change + annualized staking yield) will become a key factor in attracting capital. Grayscale’s initial success signals a strong message to the market: the technological and regulatory barriers to the “yield war” have been overcome, and the next phase of competition will focus on “who can deliver better, more stable comprehensive returns” to investors.

From a macro perspective on crypto asset valuation, this development is also significant. It makes the valuation models of proof-of-stake (PoS) assets like Ethereum more akin to traditional income-generating assets. In the future, when evaluating Ethereum’s value, besides network utility and developer ecosystem metrics, staking yield (currently about 3%-5% annually) will become a stable, quantifiable fundamental factor. This can help reduce the speculative component of its price volatility, attracting more long-term allocation capital, and potentially pushing the entire market toward a more mature and stable direction.

The Night Before the Yield War: Big Players’ Strategies and New Market Patterns

Grayscale has taken the lead but is far from content to monopolize this new blue ocean. In fact, a “staking yield competition” involving top global asset managers has already quietly begun. BlackRock registered the “Staked Ethereum Exchange-Traded Fund” in Delaware in November 2025, a key procedural step to add staking functionality to its existing spot Ethereum ETF. Although its existing iShares Ethereum Trust ETF (ETHA), launched in July 2024, does not yet include staking, BlackRock’s intentions are very clear.

Fidelity, another giant, is also active. In March 2026, Cboe BZX submitted a rule change proposal to the US SEC on behalf of Fidelity, aiming to add staking capability to its “Fidelity Ethereum Fund.” The proposal allows the fund to stake some or all of its Ethereum holdings via third-party providers. Similarly, a filing was made as early as February 2025 for the 21Shares Core Ethereum ETF. These intensive applications indicate that mainstream institutions are not merely watching but actively participating, building their staking infrastructure and compliance frameworks.

This competitive landscape suggests that the US spot Ethereum ETF market is entering a “version 2.0.” The 1.0 era focused on “from zero to one” and “scale expansion.” Since its approval in July 2024, these products attracted net inflows of up to $9.6 billion in their first full year, with total AUM approaching $18 billion. Among them, BlackRock’s ETHA, with about $11.1 billion, leads the market, followed by Grayscale’s ETHE with about $4.1 billion. The focus in the 2.0 era will shift toward “product feature optimization” and “total return enhancement.” Fee wars may temporarily ease, while “which provider’s staking service is safer and more reliable,” “whose yield extraction mechanism is more efficient,” and “who can deliver better actual returns” will become new marketing focuses and determinants of capital flow.

For ordinary investors, this competition is undoubtedly beneficial. It means more diversified and attractive products will be available in the future. Investors can choose the Ethereum exposure tool that best suits their trust in different management brands, their understanding of staking risks, and fee preferences. More importantly, as giants compete to offer the best staking yields, the overall capital efficiency of the market will be improved, ultimately benefiting all coin holders. Of course, ongoing regulatory scrutiny of staking activities (especially those conducted via third parties) remains an important variable in this process.

Market Background and Future Outlook: The Path of Ethereum ETF’s Advancement

To fully understand the significance of Grayscale’s distribution, it must be viewed within the context of the rapid yet short-lived development of US spot Ethereum ETFs. In July 2024, after a long wait and negotiations, the US SEC finally approved the listing of the first spot Ethereum ETFs, about half a year later than Bitcoin spot ETFs. However, the market expressed enthusiasm with real capital. In 2025, as the first full trading year, these funds achieved great success, with nearly $10 billion in net inflows demonstrating strong demand from institutional and retail investors for Ethereum as a core crypto asset.

Currently, the US spot Ethereum ETF market shows a “one dominant, many competitive” pattern. BlackRock, leveraging its unmatched distribution channels and brand influence, quickly took the lead with its iShares Ethereum Trust ETF (ETHA), managing over $11 billion—about 60% of the total market size. Grayscale, relying on its large existing holdings from its transition to ETF, ranks second. Other products from Fidelity, Ark Invest, and 21Shares are also actively vying for market share. The market remains young and vibrant, with each product innovation potentially causing subtle shifts in the landscape.

Looking ahead, staking yield normalization will be the next certain trend. With Grayscale completing its first distribution and giants like BlackRock and Fidelity gradually obtaining approval for their plans, it is expected that by 2026, Ethereum ETFs offering staking functionality will become standard. This could further differentiate Ethereum ETFs from Bitcoin ETFs, reinforcing Ethereum’s narrative as a “productive digital asset.” Additionally, with more mature custody, clearing, and tax services, the institutionalization of Ethereum and other PoS assets will expand further.

Another noteworthy trend is that Grayscale’s successful experience may be replicated for other promising PoS tokens. Although regulatory uncertainties are higher, whether mainstream PoS chains like Solana, Cardano, and others will provide compliant staking income portals for US investors—perhaps via trusts or new financial products—has become a hot industry topic. Once pathways are established, the financialization and integration of the entire crypto asset sector with traditional economies will reach a new level. Grayscale’s $9.4 million distribution may well be the first knock on that door.

What is Staking?

Staking is a core mechanism in proof-of-stake (PoS) blockchain networks. Participants lock a certain amount of native tokens (e.g., ETH, SOL, etc.) into the network (“staking”) to undertake responsibilities such as validating transactions, creating new blocks, and maintaining network security. In return, the network distributes newly minted tokens or transaction fees as rewards to these stakers according to rules.

This process is fundamentally different from Bitcoin’s proof-of-work (PoW) “mining.” PoW relies on computational power competition and consumes large amounts of energy; PoS, on the other hand, allocates consensus rights based on the amount and duration of tokens staked, making it more energy-efficient. For investors, staking provides a passive income source—“staking yield.” This yield is not fixed; it depends on total staked tokens, network inflation, transaction fee income, and other factors. Users can participate directly via wallets (requiring technical knowledge) or delegate staking through exchanges or professional staking service providers, which is more convenient but usually involves service fees.