The prospect of a US approval of Ether exchange-traded funds (ETFs) is raising concerns about exacerbating the Ethereum ecosystem’s concentration problem, according to S&P Global. This issue arises from the potential for staked tokens to remain in the hands of a few providers. The concern follows the approval of the first spot Bitcoin ETFs in January, with investors now anticipating Ethereum’s native token to be next. Applications for spot Ether ETFs, particularly from ARK Investment Management and Franklin Templeton, propose allowing staking, where Ether holders lock their tokens to the Ethereum network to help validate transactions and earn additional yields.

The prospect of a US approval of Ether exchange-traded funds threatens to exacerbate the Ethereum ecosystem’s concentration problem by keeping staked tokens in the hands of a few providers, S&P Global warns. After the first spot Bitcoin ETFs were approved in January, investors are expecting Ethereum’s native token to be next. Some of the spot Ether ETFs applications — namely ones from Ark Investment Management and Franklin Templeton — are proposing to allow staking, that is when Ether holders lock their tokens to the Ethereum network to help validate transactions and to earn additional yields.

S&P Global Warns of Concentration Risks in Ethereum Ecosystem with Ether ETF Applications