US spot Ethereum ETFs launched in mid-2024 without staking. Some now offer staking-inclusive versions in 2026 (after the SEC clarified the structure). The choice between ETH, an ETH ETF, a staking ETH ETF, and a liquid staking token has gotten interesting.
The four ways to hold ETH
- Non-staking spot ETH ETF (ETHA, FETH, ETHE) — Tracks ETH price; 0.20–0.40% expense ratio; no yield.
- Staking-enabled ETH ETF (newer products, 2025–2026) — Tracks ETH plus 1.5–2.5% net yield after fees; available in select brokerages.
- Self-custody ETH — Hold it yourself; no yield unless you stake or LST.
- Liquid staking tokens (stETH, rETH, eETH) — 2.5–3.5% yield; usable in DeFi; not in a brokerage account.
Why ETF staking yield is lower
Custody fees, regulatory overhead, and a portion of the yield to the staking operator (often Coinbase or Lido under specific custody arrangements) cut the headline ETH yield (~3.2%) by 60–100 basis points. The convenience trade-off may be worth it for IRA/401(k) holders.
Tax treatment differences
- Non-staking ETF — Standard capital gains on sale; no income events.
- Staking ETF — Treated like a fund — distributions or accruals may be ordinary income or capital gains depending on structure. Brokerage 1099 handles it.
- Self-custody ETH staking — Staking rewards are ordinary income at receipt + capital gains on disposal.
- LST holding — Rebasing LSTs (stETH) accrue income; non-rebasing LSTs (rETH) realise gains only on swap/sale.
Hong Kong vs US
Hong Kong has approved staking-enabled spot ETH ETFs ahead of the US. Listed HK ETFs (HashKey, ChinaAMC) provide direct staking yield with simpler tax treatment for HK residents. EU equivalents (ETN products from 21Shares, CoinShares) typically do not stake.
The pragmatic choice
For tax-advantaged accounts (IRA): the ETF is the only practical option — pick a staking-inclusive version if available. For taxable accounts: self-custody ETH and run liquid staking yourself. Yields are higher, DeFi composability is unlocked, and you stay in control.
See our Ethereum staking guide and the liquid staking tokens deep-dive.
