Grayscale to Pay Quarterly Cash From ETH and SOL Staking Rewards

Grayscale has filed to amend its Ethereum Staking ETF (ETHE) and Solana Staking ETF (GSOL) to convert staking rewards into cash and distribute them to shareholders at least once a quarter, according to an onchain analyst report. The proposed amendments would require the trusts to distribute net staking rewards consistently, either in kind or after a cash sale, no less frequently than quarterly.

If adopted, each trust would convert the ether or solana earned through staking into cash at least quarterly and distribute the proceeds after covering expenses not already absorbed by the sponsor. The change is intended to take effect around Aug. 7, giving investors a predictable payout calendar instead of ad hoc distributions.

The new schedule fixes timing, not amounts. Payouts will vary based on how much ETH or SOL the trusts actually stake, fees, and each fund’s tax treatment. Under grantor-trust rules, U.S. holders would recognize their pro rata share of staking rewards as taxable income when the trust receives them, regardless of when cash lands in shareholder accounts. Any ETH or SOL sold to fund a distribution could separately trigger capital gains or losses.

GSOL currently stakes 100% of its SOL holdings, generating gross staking rewards of about 6.1% annually. The amount converted to cash and paid out will be net of fees and tax withholding. Grayscale also reduced costs on the solana side: effective June 25, GSOL’s sponsor fee dropped from 0.35% to 0.19%, and its staking fee fell from 23% to 7%, leaving more yield with shareholders.

The move comes amid intensifying competition for staking-enabled crypto ETFs. Morgan Stanley filed its own S-1 amendments for spot ether and solana ETFs in July, naming Coinbase as custodian and staking provider at a 0.14% sponsor fee, with the ether trust planning to stake 50% to 80% of its holdings and the solana trust up to 100%.

A predictable quarterly cash payout is easier for advisors and retail holders to model than uneven reward accruals inside a fund’s net asset value. The amendments still need SEC review before Aug. 7, with the first quarterly distributions following in the months after. Ether was trading near $1,857 and solana near $75.89 at the time of reporting.

Source: https://news.bitcoin.com/grayscale-quarterly-cash-eth-sol-staking-rewards/