Grayscale Announces Plan to Pay Out Ethereum and Solana Staking Rewards in Cash

Grayscale Investments has decided to pay out staking rewards generated from its Ethereum and Solana exchange-traded products (ETPs) to investors as regular cash. According to industry sources on July 20, 2026, Grayscale is amending the trust agreements for the Ethereum Staking ETF (ETHE) and Solana Staking ETF (GSOL) to introduce a system for monetizing and distributing reward payments.

This move is significant in that it converts staking rewards, which were previously reflected in asset value or reinvested, into a direct source of income. Grayscale has submitted an amended disclosure containing the relevant details to the Securities and Exchange Commission (SEC), and the new distribution method is expected to take effect around August 7, 2026.

In the cryptocurrency asset management market, the model of paying out staking rewards in cash is emerging as a key strategy for attracting investors. In particular, institutional investors tend to prefer regular cash flows similar to traditional dividends, rather than just capital gains from price increases, which is why this change in product structure is drawing market attention.

The Grayscale Solana Staking ETF (GSOL) stakes 100% of its Solana (SOL) holdings and, as of July 16, 2026, records a gross annual staking reward rate of approximately 6.10%.

According to data from Solana Compass, GSOL distributes net income to investors after deducting the sponsor's staking fee and fund operating expenses from the generated rewards. This will be applied similarly to the Ethereum product, with cash conversion and distribution expected to occur at least once per quarter following the amendment of the trust agreement.

Detailed Mechanism of Staking Reward Distribution

According to the summary of the ETHE prospectus submitted by Grayscale to the SEC, the trust must convert 'Staking Consideration' into US Dollars (USD) immediately or periodically after receiving it. Transaction costs and taxes incurred during this process are deducted from the distribution, and the final remaining amount is paid to shareholders.

• Distribution Cycle: Principle of cash payment at least once per quarter
• Scheduled Implementation Date: August 7, 2026 (upon completion of trust agreement amendment)
• Target Assets: Ethereum (ETH) and Solana (SOL) staking reward income
• Tax Treatment: For US residents, recognized as taxable income at the time the reward is received

The market analyzes Grayscale's move as an attempt to gain an advantage in the 'yield war' with competitors. Currently, REX-Osprey's Solana Staking ETF (SSK) already implements monthly distributions, and it is evaluated as having an advantage in terms of payment cycles compared to Grayscale, which opted for quarterly payments.

Such competition among asset managers is producing positive effects by providing investors with higher real yields and transparent reward systems. However, since the fee structure and staking efficiency differ for each product, investors should closely compare the overall yield relative to costs, not just the payment cycle.

Tax-related risks are also a factor that investors must consider. CryptoSlate pointed out that US investors are likely to have to report proportionally distributed rewards as taxable income at the time the trust receives the rewards, regardless of when they actually receive the cash, and urged caution.

Additionally, the disclosure documents stated that if the trust is classified as a corporation, a 21% federal income tax may be imposed on net taxable income, and a withholding tax of up to 30% on dividends may apply to foreign investors. This is a variable that can significantly affect the final return that investors actually receive.

In the future, investors should keep an eye on the final confirmation of the contract amendment scheduled for August 7, 2026, and the date of the first distribution declaration. If Grayscale's attempt is successfully established, other major cryptocurrency ETP issuers such as BlackRock and Fidelity are likely to introduce similar cash distribution models.