THE APEX TIMES
Morgan Stanley files for spot Ethereum and Solana ETFs aimed at returning most staking rewards
The proposed funds would charge a 0.14% management fee and would return 95% of staking rewards earned on-chain, according to a report. Regulators have not yet approved the products.
Morgan Stanley has filed for spot exchange-traded funds (ETFs) tied to Ethereum and Solana, looking to package the digital assets and their staking income into regulated products, according to a report published Wednesday by Yahoo Finance.
The filing contemplates two separate spot crypto ETFs and sets the funds’ management fee at 0.14% annually. The same report says the proposed structure is designed to return most staking rewards to investors, with 95% of on-chain staking rewards earmarked for shareholders rather than retained by the fund.
Staking rewards are payments earned for participating in a blockchain’s “proof-of-stake” network operations, typically by holding and committing tokens to help validate transactions. Unlike price gains or losses from the underlying crypto holdings, staking rewards can vary with network conditions, participation rates, and protocol rules.
In practice, fund sponsors must translate those on-chain mechanics into an ETF wrapper that can account for how rewards are accrued, converted (if needed), and distributed. The report’s disclosure that a large share of staking rewards would be passed through to shareholders is notable because the treatment of staking income has been a point of design scrutiny in the broader market for crypto ETFs and related products.
Morgan Stanley’s move also fits a wider pattern among traditional financial firms exploring more direct crypto exposure through spot ETF vehicles. Compared with derivatives-based approaches, spot products generally track the value of the underlying assets more closely, though they still introduce operational and custody requirements that regulators and issuers must address.
For investors, a 0.14% management fee plus an apparent 95% pass-through of staking rewards would mean performance would be influenced by both token price movement and the level of staking income during the holding period. The staking component could matter even when token prices are flat or volatile, depending on how quickly and how consistently rewards are generated and reflected in fund value.
Still, several details are not provided in the report. It does not, for example, specify how and when staking rewards would be distributed versus reinvested, whether rewards would be distributed in-kind or in cash, or how the issuer would handle situations where staking is delayed, interrupted, or partially limited by operational constraints.
The next key step will be regulatory review. Until regulators approve the filings and the ETFs launch, the practical mechanics, final fees, and reward-handling terms may change from what has been described publicly in the reporting. Investors and other market participants will likely watch for disclosures on custody, staking operations, and the precise accounting of staking returns.
Why It Matters
- If approved as described, the proposal would represent a staking-reward pass-through structure inside an ETF wrapper, potentially changing how investors think about crypto return streams.
- A lower headline fee combined with a high staking-reward share could make the funds competitive versus structures that retain more of staking income, if those economics hold in the final documents.
- The design of staking operations and reward accounting can affect tracking and investor outcomes, especially during periods of network changes or shifting staking yields.
- Broader acceptance of spot crypto ETFs from large financial institutions could influence market liquidity and how traditional investors gain exposure to digital assets.
Key Facts
- Morgan Stanley filed for spot Ethereum and Solana ETFs, according to a report.
- The proposed ETFs’ management fee is 0.14% annually.
- The filing described a plan to return 95% of on-chain staking rewards to shareholders.
- The report frames the products as spot crypto exposure with an added staking-reward component.
- Regulatory approval and final fund terms have not been described as complete in the report.
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