Mike Novogratz, CEO of Galaxy Digital Holdings Ltd (TSE: GLXY), is optimistic about the future of staking for US spot Ethereum ETF products. Despite the current regulatory stance of the US Securities and Exchange Commission (SEC), Novogratz believes staking for these financial products will become viable within the next two years.

In an interview at Consensus 24, Novogratz predicted that regulators would allow staking for Ethereum ETF products within 12-24 months. Bloomberg ETF analyst Eric Balchunas estimated the S-1 approval and trading of Spot Ethereum ETFs to occur in June or July, aligning Novogratz's projection with mid-2025 to mid-2026.

Novogratz’s prediction comes as the SEC remains cautious about approving spot cryptocurrency ETFs. However, the regulatory environment is gradually evolving, with market participants advocating for more advanced financial products.

Meanwhile, Hong Kong’s crypto market has been active since the Securities and Futures Commission (SFC) approved six spot Bitcoin (BTC) and Ether ETFs in late April. The SFC is now considering allowing staking for these products, potentially putting Hong Kong ahead of the US in this regard. The SFC is reportedly in discussions with crypto ETF issuers about permitting Ethereum staking through licensed services, which could offer investors passive income opportunities.

In the US, top players like Fidelity Investments have updated their S-1 filings to meet SEC requirements and exclude Ethereum staking. Fox Business reporter Eleanor Terrett revealed that CoinShares and Valkyrie, issuers of spot Bitcoin ETFs, will not apply for Spot Ethereum ETF due to the absence of a staking function. These companies believe the lack of staking reduces the ETF's value for investors in a crowded market.

Despite the removal of staking from applications to comply with the SEC, investors may still favor Ethereum in the ETF market due to its strong technological fundamentals and alignment with evolving financial systems through smart contracts. Additionally, Ethereum’s Proof-of-Stake (PoS) consensus mechanism is seen as more environmentally friendly than Bitcoin.