Grayscale Investments has amended the trust agreement for its Ethereum Mini ETF (NYSE Arca: ETH) to convert staking rewards into cash and distribute them to shareholders on a recurring basis, according to an 8-K filing with the U.S. Securities and Exchange Commission (SEC). The change took effect on August 6, mandating that the fund stakes all of its ETH at all times with limited exceptions for operational reserves. Rewards must be converted to cash at least once per quarter and paid out after deducting related costs, with Grayscale currently planning monthly distributions when rewards are sufficient.
The move builds on Grayscale’s early staking activation in October 2025, when it became the first U.S. issuer to integrate staking into spot crypto funds. As of the filing, the Mini ETF had already accumulated $27.3 million in net rewards, generating an annualized return of 2.61% after fees. The fund had staked 80.8% of its 839,556 ETH, leaving approximately 161,000 ETH idle as a reserve for redemptions and expenses. The new agreement aims to deploy that idle capital into staking, potentially increasing distributable rewards over time.
The amendment arrives against a supportive regulatory backdrop. In November 2025, the Internal Revenue Service (IRS) issued rules that allow crypto funds to stake without triggering tax obligations at the fund level, provided rewards are passed through to shareholders at least quarterly. By going further and planning monthly cash payouts, Grayscale may enhance the ETF’s appeal to income-oriented investors, though actual payout amounts will fluctuate with network rewards.
Competitive pressure is intensifying. Morgan Stanley recently launched Ethereum and Solana funds with a fee of just 0.14%, undercutting Grayscale’s 0.15%. The ability to pass through staking income has become a key differentiator. Ethereum was trading around $1,915 at the time of the announcement, with a modest 0.4% 24-hour gain. If Grayscale successfully scales its staked ETH toward the operational maximum, the fund’s yield profile could attract more institutional capital, influencing both liquidity and ETH’s market dynamics. The first cash distribution is expected after the effective date, though an exact timeline has not been disclosed, and investors should consider tax implications and variable reward structures.
