As excitement grows around the potential approval of spot Ethereum exchange-traded funds (ETFs) in the U.S., the removal of staking rewards from these proposals is seen as a critical factor in the Securities and Exchange Commission's decision-making process.

Unlike Bitcoin, Ethereum's proof-of-stake protocol allows users to stake their assets on the network, contributing to its security in exchange for a yield, currently at around 3%. Recent adjustments by Ark Invest and other entities, such as Fidelity and Grayscale, to remove staking components from their ETF applications reflect a shift in approach.

The revised language in these filings may address the SEC's concerns regarding staking cryptocurrencies. For instance, the SEC previously took legal action against Coinbase for offering staking services, alleging violations of securities laws.

While the removal of staking rewards for investors in these potential ETFs is evident, questions lingered regarding whether asset managers would be permitted to stake ether for themselves. However, recent filings by entities like Fidelity have explicitly stated that neither the Trust, the Sponsor, the Custodian, nor anyone else associated with the Trust will engage in staking actions with the fund's ether.

The SEC faces upcoming deadlines to decide on spot Ethereum ETF applications from VanEck and Ark Invest, setting the stage for potential developments in the ETF landscape.