Grayscale Investments has proposed changes to its Ethereum and Solana staking exchange-traded funds (ETFs) that would require staking rewards to be distributed to investors in cash at least once every quarter
The asset manager filed separate Form 8-K disclosures on July 17 for the Grayscale Ethereum Staking ETF (ETHE) and Grayscale Solana Staking ETF (GSOL). The proposed amendments, expected to be executed on or around August 7, would establish a recurring framework for distributing staking rewards to shareholders.
Mandatory Distribution Framework
If adopted, the amended trust agreements would require each fund to convert staking rewards earned in ETH or SOL into cash no less frequently than quarterly and promptly distribute the net proceeds to shareholders.
Before distributions are made, the trusts may deduct expenses not assumed by the sponsor, including compensation paid to Grayscale for facilitating staking arrangements. The filings note that payout amounts cannot be predicted because they depend on the staking rewards generated during each distribution period.
While the amendments establish a minimum payment schedule, they do not guarantee fixed distribution amounts. Grayscale may distribute rewards more frequently if it chooses.
Changes Designed to Support Staking
Beyond introducing recurring cash distributions, the proposed amendments would also revise the trust agreements to support the ETFs’ staking programs and implement a mandatory distribution framework for staking rewards.
Grayscale said the amendments are necessary to align the trusts with IRS Revenue Procedure 2025-31, which outlines the conditions under which grantor trusts may participate in staking while maintaining their U.S. federal income tax status.
The IRS guidance allows qualifying trusts to distribute net staking rewards either in digital assets or after converting them into cash, provided distributions occur at least quarterly. Grayscale has opted for the cash-distribution approach.
What’s Next For Investors
The filings note that quarterly cash distributions will not delay U.S. tax obligations. Assuming the trusts continue to qualify as grantor trusts, shareholders would generally recognize staking rewards as taxable income when the trusts receive them, while selling ETH or SOL to fund the payouts could also result in capital gains or losses.
Grayscale said the proposed amendments are not materially adverse to shareholders and is providing the required 20-day advance notice before implementing the changes.
The company expects to execute the revised trust agreements on or around August 7, after which it plans to file updated prospectus supplements and supplemental disclosures on tax consequences and risk factors.
If approved, the amendments will establish recurring quarterly cash distributions for both ETFs, with payout amounts remaining dependent on staking rewards earned and trust expenses.
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