S&P Global Ratings, US spot market with staking feature Ethereum He issued a warning that Ethereum’s concentration risk could increase as a result of the potential approval of its ETFs.
These ETFs could be large enough to shift validator concentrations on the Ethereum network, S&P analysts Andrew O’Neill and Alexandre Birry noted in a report on Tuesday. They emphasized the importance of understanding how the choices of ETF holding companies will drive these concentration risks.
Analysts predict that the U.S. Securities and Exchange Commission (SEC) could approve spot ETH ETFs as early as May of this year. This will be the first deadline for approval of such funds. Many companies, including industry giants such as BlackRock and Fidelity, have applied for spot ETH ETFs. Among the applicants, particularly Ark Invest and Franklin Templeton, aim to generate additional returns mainly by staking Ethereum.
Currently, Lido, a decentralized liquid staking protocol, is the largest Ethereum validator, followed by Coinbase. S&P analysts believe spot ETH staking ETFs are unlikely to opt for decentralized protocols like Lido. Instead, an institutional cryptocurrency They are likely to prefer the custodian. The impact on concentration will vary depending on whether companies diversify their holdings across multiple custodians.
Analysts say, “Coinbase has recently approved 11 US Bitcoin “It acts as a custodian for eight of its ETFs and is named as a staking institution by three of the four largest ETH staking ETFs outside the US,” he said. They added that the emergence of new digital asset custodians could enable ETF companies to spread their stakes across different institutions and reduce this risk.
*This is not investment advice.
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