Microsoft may be open to Ethereum ETF with staking, VanEck head of crypto research speculates

Key Takeaways

Microsoft is potentially interested in exploring crypto investments like spot Ethereum ETFs with staking.
Currently, US Ethereum ETFs lack staking features due to SEC regulatory concerns.

Microsoft has rejected a Bitcoin investment proposal, but the company may be open to exploring other crypto investment opportunities. VanEck’s head of digital assets research Matthew Sigel said that Microsoft might be inclined to consider an Ethereum ETF investment if the product includes staking feature.

Sigel perceived this potential openness in a comment made by Amy Hood, Microsoft’s Chief Financial Officer, during the company’s annual shareholder meeting on Tuesday, where shareholders overwhelmingly rejected a proposal to adopt Bitcoin as a treasury asset.

Hood mentioned that Microsoft has been accepting crypto as payment since 2014 and has been considering crypto as an asset class. She noted, however, that the priority is liquidity, capital preservation, and income generation for its investments.

“Our treasury team, along with reviews with the Board of Directors, looks at all the asset classes available to us. It’s important to remember our criteria and our goals of our balance sheet and for the cash balances, importantly, is to preserve capital, to allow a lot of liquidity to be able to fund our operations and partnerships and investments,” Hood said. “So liquidity is also a really important criteria for us, as well as generating income.”

Sigel speculated that Microsoft might be interested in an Ethereum ETF that allows them to participate in Ethereum staking and earn rewards.

When asked to elaborate on his reasoning, he pointed out that the tech giant believes in crypto’s utility and that the board “has already and will continue to evaluate digital assets for the reserve.”

Sigel also noted that assets that provide yield are more likely to be considered for acquisition by Microsoft.

Currently, no US-based Ethereum ETFs include staking features due to regulatory concerns about staking services potentially being unregistered securities offerings.

However, the securities regulator may be open to discussing Ethereum ETFs with staking capabilities with the incoming Trump administration and the anticipated new leadership at the SEC.

SEC Commissioner Hester Pierce has indicated that discussions around staking and other features could be revisited.

Incorporating staking into Ethereum ETFs could reduce management fees, potentially bringing them down to near-zero levels. This would make these ETFs more appealing to investors, as they could earn rewards while minimizing costs.

Analysts believe that allowing staking within Ethereum ETFs could help them compete more effectively with Bitcoin ETFs, which currently dominate the market.

Nate Geraci, president of the ETF Store, believes spot Ethereum ETFs including staking “is a matter of when, not if.”

“Indications are that a Trump administration would be much more crypto-friendly, which could certainly accelerate the timeline of when staking might be allowed. Otherwise, ETF issuers could be left waiting on a comprehensive crypto regulatory framework to be put in place, which would likely take significantly longer,” he explained.