Gemini is serving as the custodian for a “landmark” ether staking ETF fund launched recently by Purpose Investments, following the development of custom custody infrastructure that will enable third-party staking from Gemini Custody.
The fund, Purpose Ether Staking Corp. ETF (“ETHC.B”), is said to be “the largest staking ether ETF in North America at the time of publication, with an AUM of $230 million.”
The launch follows Purpose Investments reaching “an agreement on Friday, June 14, 2024, with Ether Capital, a Toronto-based crypto firm, to convert Ether Capital into a staking ether exchange-traded fund (ETF) that Purpose manages.”
To stake ether, crypto investors agree “to lock up ether in exchange for validating transactions on the network and earning rewards (more ether).”
This process is unique to Ethereum’s 2.0 network, which leans “on a proof-of-stake process.”
As part of the fund launch, Gemini partnered “with Purpose Investments and Ether Capital to develop new technological infrastructure to enable the fund’s ether to be staked by Ether Capital, with Gemini Custody providing enhanced protection and security of the assets in its capacity as custodian.”
Staking is unique in the investing world “because it allows investors to take part in the development of the underlying asset, and to earn a return while doing so.”
It can be a challenging undertaking for individual investors, “involving selecting and running a validator node, protecting private keys, and ensuring a network connection.”
Making staking available through well known investment vehicles like ETFs allows more investors to “take part in building the ecosystem of their underlying assets.”
Recently prospective ether ETF issuers in the United States have “removed plans for staking from their applications, which some believe may have been in response to SEC feedback.”
Spot ether ETFs are slated to “launch in the US at some point this summer after the SEC approved 19b-4s from several fund issuers, but the current approved framework does not allow for the staking of assets.”
Purpose’s ether staking ETF will be a unique competitive edge “for investors to fully utilize the proof-of-staking mechanism embedded in the Ethereum network.”
As a qualified custodian, Gemini Custody safeguards customer assets “using multisignature technology, role-based governance protocols, physical security, and multiple layers of biometric access controls.”
They’re grateful for the opportunity to “support this innovative product and excited for Purpose Investments as they expand access to crypto through this historic launch.”
