Ethereum’s network activity has seen a significant shift in recent weeks, with transaction fees dropping to their lowest level in over four years, while regulatory discussions around Ethereum ETF staking continue to unfold. The average transaction fee on Ethereum fell to just $0.77 on Feb. 15, marking a 70% decline from the previous week and reflecting a slowdown in on-chain activity. At the same time, the US Securities and Exchange Commission (SEC) acknowledged a filing from Cboe BZX Exchange on behalf of 21Shares, which could allow staking for its Ethereum ETF if approved.
SEC Acknowledges 21Shares’ Filing for Ethereum ETF Staking, Signaling a Shift in Crypto Regulation
The US Securities and Exchange Commission (SEC) acknowledged a 19b-4 filing from Cboe BZX Exchange on behalf of 21Shares on Wednesday, marking a significant step toward allowing staking for spot Ethereum exchange-traded funds (ETFs). If approved, this move would enable the 21Shares Core Ethereum ETF to generate additional yield through staking, with potential benefits passed directly to investors.
This development comes amid evolving regulatory attitudes toward staking, particularly under the Trump administration, which has shown a willingness to revisit previous SEC positions on crypto-related financial products. The filing follows a similar move last week by NYSE Arca, which requested approval to permit staking for Grayscale’s Ethereum ETFs.
Ethereum staking involves locking up ETH to help secure the network and validate transactions, with participants earning rewards in return. By allowing an ETF to stake its holdings, the fund could provide an additional yield stream for investors beyond simple price appreciation.
According to the 19b-4 filing, all staked ETH would remain the exclusive property of the ETF trust, meaning the staking process would not involve third-party delegation or a ”staking as a service” model. This distinction could help alleviate regulatory concerns about securities implications and investor protections.
“The ether staked by the Sponsor on behalf of the Trust will consist exclusively of ether owned by the Trust,” the filing states. “The Sponsor’s staking activities on behalf of the Trust will not constitute ‘delegated staking’ and will not form part of a ‘staking as a service’ offering.”
If approved, the move would position Ethereum ETFs as more attractive investment vehicles by allowing holders to benefit from Ethereum’s proof-of-stake consensus mechanism while maintaining exposure to ETH price movements.
The SEC’s acknowledgment of this filing comes amid a broader reassessment of staking regulations. Under former SEC Chair Gary Gensler, the agency maintained that proof-of-stake (PoS) tokens were securities, leading many fund issuers to exclude staking from their ETF proposals when spot Ethereum ETFs were first approved last summer.
However, the regulatory landscape has started to shift. Under the Trump administration, the SEC has established a crypto task force to evaluate classification frameworks for digital assets, with discussions surrounding whether staking should be viewed as a commodity-based activity rather than a security-linked function.
According to Ruslan Lienkha, Chief of Markets at YouHodler, staking could soon receive the necessary legal clarity to gain institutional traction.
”Under the Trump administration, staking is likely to receive the necessary legal framework, paving the way for broader adoption, including participation by institutions,” Lienkha said in December. ”With such a framework in place, Ethereum is well-positioned to attract increased liquidity as it offers an additional yield-generating opportunity through staking.”
If the SEC ultimately grants approval, staking-enabled ETFs could provide institutional and retail investors with a more lucrative Ethereum investment structure, possibly leading to a wave of similar filings by other fund issuers.
The push for staking in Ethereum ETFs coincides with a notable increase in institutional interest in these funds. The most recent 13F filings—a quarterly disclosure by institutional investors—showed that institutional ownership of Ethereum ETFs surged from 4.8% to 14.5% in Q4 2024, marking a significant uptick in confidence. Meanwhile, institutional holdings in Bitcoin ETFs dipped slightly from 22.3% to 21.5%.
The growing institutional presence in Ethereum ETFs suggests that professional investors are becoming more comfortable with ETH as an asset class, and staking could further solidify Ethereum’s position as a yield-bearing alternative to traditional investment products.
What’s Next? SEC Review and Market Impact
The SEC’s acknowledgment of 21Shares’ filing does not mean immediate approval, but it is a key procedural step in advancing the proposal. The regulator will now seek public comments and conduct a thorough review before making a final decision.
If approved, Ethereum staking within ETFs could set a precedent for broader adoption, potentially influencing other issuers such as BlackRock and Fidelity to follow suit. Furthermore, investors may begin favoring Ethereum ETFs over Bitcoin ETFs due to their yield-generating capabilities.
Market participants are closely watching the SEC’s decision-making process, as approval could spur additional capital inflows into Ethereum ETFs, reinforcing ETH’s position in institutional portfolios. Moreover, as staking rewards become more accessible via ETFs, Ethereum’s liquidity and network security could improve, further bolstering its long-term value proposition.
The SEC’s acknowledgment of 21Shares’ staking proposal signals a potential turning point in Ethereum ETF evolution and broader staking regulation. If approved, Ethereum ETFs could become more attractive than traditional crypto ETFs by offering both price exposure and staking yield.
With growing institutional interest and shifting regulatory perspectives, Ethereum’s financialization is accelerating, positioning ETH as a more versatile and lucrative investment option in the years ahead. Investors and industry participants now await further clarity from the SEC, as its decision could shape the next wave of institutional adoption in the crypto space.
Ethereum Transaction Fees Plunge to Four-Year Low Amid Sluggish Network Activity
In related news, Ethereum’s transaction fees have plummeted to their lowest level in over four years, signaling a drastic decline in on-chain activity. According to recent data, the 7-day moving average (7DMA) of transaction fees on the Ethereum network fell to $0.77 on Feb. 15, marking a staggering 70% drop from $2.57 just a week prior. The last time Ethereum transactions were this inexpensive in dollar terms was July 2020—a period well before the explosive growth of decentralized finance (DeFi) and non-fungible tokens (NFTs) propelled Ethereum’s network usage and fees to historic highs.
At the same time, Bitcoin’s network activity has also taken a hit, with transactions dropping 55% from their peak, pushing activity on the Bitcoin blockchain to a 12-month low. The combined decline in both major networks suggests that cryptocurrency market participation is entering a lull, which could have broader implications for blockchain adoption and investor sentiment.
Further illustrating this downward trend, Ethereum’s median gas price, measured in Gwei, has sunk to historic lows. Over the past week, the daily median gas price averaged 1.61 Gwei, with the lowest reading coming in at 1.19 Gwei on Feb. 15.
Notably, this marks only the second time since January 2020 that Ethereum’s gas prices have dropped this low, with the previous occurrence recorded in September 2024. Such low gas prices typically indicate a reduction in network congestion, which can be either a sign of increased efficiency or a severe drop in user activity.
While lower transaction fees usually encourage more activity on the network, the scale of this fee collapse suggests a different narrative. The drastic reduction in costs appears to be a symptom of declining demand rather than a direct result of network optimizations.
Supporting this claim, Ethereum’s on-chain transaction volume has seen a major slump, with the 7DMA of Ethereum’s on-chain volume dropping to just $4.19 billion on Feb. 15. This represents a 46% decline from the previous week and marks Ethereum’s lowest daily volume since Nov. 7, 2024, just after the US presidential election.
This decline in transaction volume highlights a significant cooling-off period for Ethereum, which has faced several hurdles in recent months, including:
Diminished DeFi activity, as users seek alternative yield opportunities outside the blockchain.
A prolonged NFT market downturn, with trading volume and floor prices struggling to recover.
A lack of major Ethereum network upgrades or catalysts to drive user engagement and development activity.
Ethereum’s Struggles Continue
Ethereum’s fee collapse follows weeks of worrisome trends for the blockchain. As competition from Layer-2 scaling solutions and alternative Layer-1 networks like Solana and Avalanche grows, Ethereum’s once-unrivaled dominance in the smart contract space is facing increasing pressure.
Additionally, institutional interest in Ethereum ETFs has been rising, but the core on-chain ecosystem still faces headwinds. Despite the recent SEC acknowledgment of 21Shares’ Ethereum ETF staking proposal, staking yields alone may not be enough to reignite user engagement on the Ethereum network.
Ethereum’s woes also stand in stark contrast to Bitcoin’s recent price rally, which has largely been driven by the approval of spot Bitcoin ETFs and anticipation of the next Bitcoin halving event in April 2025.
For Ethereum to reverse this downward spiral, several catalysts may need to emerge, including:
Renewed DeFi growth driven by fresh innovations in decentralized exchanges and lending protocols.
A resurgence in NFT interest, potentially fueled by a new wave of mainstream adoption.
Layer-2 adoption translating into greater on-chain activity, rather than drawing liquidity away from the main Ethereum network.
Ethereum’s sharp decline in transaction fees and network activity underscores growing concerns about waning demand on the blockchain. While lower fees could theoretically attract more users, the reality appears to be a prolonged slowdown in network usage, with on-chain volume and transaction counts hitting multi-year lows.
This article was originally Posted on Coinpaper.com
