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Two of the biggest players in the U.S. crypto exchange-traded fund (ETF) market, Bitwise and 21Shares, have unveiled major updates to their offerings — introducing staking features and cutting fees to attract investors. The move, announced this week, highlights the next stage in the evolution of crypto investment products, moving beyond simple price exposure toward yield-generating opportunities.
A New Era for Crypto ETFs
The updates come just days after Grayscale became the first to add staking functionality to its U.S. Ethereum ETFs. With this move, Bitwise and 21Shares are signaling that American crypto funds are entering a new phase — one where investors can earn additional income through blockchain participation rather than relying solely on price appreciation.
Bitwise, one of the most active issuers in the digital asset ETF space, filed to rename its product as the “Bitwise Solana Staking ETF.” The fund will offer exposure to Solana’s value while generating staking rewards from securing the blockchain network.
The filing also outlines a 0.20% unitary management fee, which covers all operating costs. In a competitive twist, Bitwise announced that the fee will be waived for the first three months on the initial $1 billion in assets under management — effectively making it one of the lowest-cost crypto ETFs on the market.
Competitive Pressure Builds Among ETF Providers
At just 0.20%, Bitwise’s proposed fee undercuts most competitors, whose management costs typically fall between 0.21% and 0.25%. This move mirrors the aggressive pricing strategies seen in early 2024, when a “fee war” broke out among issuers racing to launch Bitcoin ETFs following regulatory approval.
According to Bloomberg senior ETF analyst Eric Balchunas, Bitwise’s pricing strategy is a “good sign for inflow potential,” noting that low fees have historically driven stronger investor participation in ETF products.
21Shares Expands Ethereum Offering
Meanwhile, 21Shares has also moved to enhance its crypto fund lineup. The company filed an update for its 21Shares Ethereum ETF (TETH), adding staking capabilities and waiving its 0.21% sponsor fee for the next 12 months starting October 9.
In a statement, Federico Brokate, head of U.S. business at 21Shares, called the update a “natural evolution of Ethereum investment products in the U.S. market.” He emphasized that the addition of staking rewards allows investors to gain “both exposure to Ethereum’s price movements and participation in network validation.”
How Staking ETFs Work
Staking is the process of locking up digital assets like Solana (SOL) or Ethereum (ETH) to help secure their networks. In return, participants earn small rewards in the form of additional tokens. By integrating staking into their ETFs, Bitwise and 21Shares allow investors to benefit from blockchain rewards without directly handling crypto wallets or validators.
Those staking rewards will flow back into the ETF, increasing the value of the fund and providing a passive income stream for investors. This structure could make staking ETFs particularly attractive to institutional investors seeking yield without the technical complexity of managing on-chain assets.
Analysts Weigh In
Maksim Balashevich, founder and CEO of analytics firm Santiment, said institutional investors will likely focus on “how much of the staking yield will be passed to them.” He noted that for investors already exposed to both Solana and Ethereum through other vehicles, staking ETFs could simplify portfolio management by combining yield and exposure in one instrument.
“Yield is what’s different here,” Balashevich explained. “The competition will likely happen on this field.”
Market observers also believe that staking ETFs could accelerate mainstream adoption by bridging the gap between traditional finance and blockchain participation. If approved and widely adopted, these funds could redefine how investors engage with digital assets — not just by holding them, but by helping to operate the underlying networks.
Grayscale Sets the Stage
The shift toward staking ETFs began earlier this week when Grayscale became the first U.S. issuer to introduce staking for Ethereum ETFs. Grayscale’s Ethereum Trust (ETHE) and Ethereum Mini Trust (ETH) — which collectively manage nearly $5 billion in assets — now allow investors to earn staking rewards through a “diversified network of validator providers.”
The firm’s addendum, filed with the SEC, marked a pivotal step in legitimizing staking as part of regulated ETF structures. Now, Bitwise and 21Shares are following suit — and possibly setting the stage for broader adoption across other crypto assets.
What This Means for Investors
The race to integrate staking is expected to intensify competition among ETF providers. With lower fees and new reward mechanisms, these funds could draw significant inflows from both retail and institutional investors.
However, analysts caution that staking introduces additional technical and regulatory complexities, such as validator performance, yield variability, and custody risk. Despite these challenges, the growing demand for diversified crypto exposure makes staking ETFs a logical next step in the evolution of the digital asset market.
Looking Ahead
The entry of Bitwise and 21Shares into the staking ETF arena underscores how quickly the U.S. crypto investment landscape is changing. What began as a race to track Bitcoin’s price has now evolved into a competition to offer yield, security, and utility — features that bring crypto ETFs closer to traditional income-generating assets.
As Balchunas put it, ETF issuers are “not playing around.” The combination of staking rewards and fee reductions signals a new phase of innovation aimed at making digital asset investing more rewarding, accessible, and mainstream than ever before.
