USDGrayscale Drops Three Altcoin ETFs as Staking Funds Formalize Cash Payouts
ADA, DOT and HBAR Plans End as Reward Distributions Take Shape
TL;DR
- Grayscale withdrew proposed exchange-traded funds tied to Cardano, Polkadot and Hedera through sponsor-initiated SEC filings.
- Separate amendments require ETHE, GSOL and GAVA to convert staking rewards into cash at least quarterly and distribute net proceeds.
- The staking mechanism applies to earned rewards rather than the funds’ principal ETH, SOL and AVAX holdings.
Trade smarter on Jupiter, Solana’s leading DEX built for fast execution and deep liquidity.
Swap tokens at competitive rates, route across multiple liquidity sources automatically, and access perpetuals, DCA, and advanced trading tools — all in one place!
Grayscale Investments has withdrawn planned exchange-traded funds tied to Cardano’s ADA, Polkadot’s DOT and Hedera’s HBAR while separately formalizing recurring cash distributions from staking rewards earned by its Ethereum, Solana and Avalanche products. The three altcoin ETF withdrawals were initiated by Grayscale rather than rejected by the U.S. Securities and Exchange Commission, while amendments to its staking funds require earned rewards to be converted into cash on a recurring schedule.
Grayscale submitted three withdrawal requests to the SEC within four minutes late Friday, Aug. 7, telling the regulator it “does not intend to proceed with the planned distribution” of shares in each trust. None of the registrations became effective, no securities were issued or sold under them, and Grayscale said it had not distributed preliminary prospectuses. Grayscale provided no public reason for the withdrawals, and the filings do not prevent the asset manager from submitting new registrations for the assets later.
The abandoned products had been under development since 2025. Grayscale made its initial Cardano ETF proposal in February 2025 and pursued its Polkadot filing later that month. Corresponding ADA and DOT registration statements followed on Aug. 29, with the HBAR registration submitted on Sept. 9. The proposed funds were structured as passive vehicles intended to track the value of their respective tokens after fees and expenses.
The withdrawals shrink Grayscale’s proposed single-token pipeline without representing a broader retreat from crypto exchange-traded products. At the time of the Aug. 10 disclosure, Grayscale listed 17 ETF products, including the Bitcoin Mini Trust ETF, Ethereum Staking Mini ETF and Hyperliquid Staking ETF. Grayscale had not immediately provided additional comment when contacted about the decision.
Staking Funds Set Recurring Reward-to-Cash Schedule
Separate trust amendments executed Aug. 6 for the Grayscale Ethereum Staking ETF, or ETHE, Grayscale Solana Staking ETF, or GSOL, and Grayscale Avalanche Staking ETF, or GAVA, established a mandatory schedule for converting staking rewards into cash. Form 8-K filings submitted the following day state that each trust must reduce its “Staking Consideration” to cash no less often than quarterly, with net proceeds distributed promptly after applicable fees and trust expenses.
The trusts currently intend to make those distributions monthly, although the binding minimum remains quarterly. Under the structure, each fund receives staking rewards, periodically sells the earned tokens for cash, deducts applicable expenses and distributes the remaining proceeds to shareholders. That process creates recurring sales of reward tokens, but it does not require scheduled liquidation of the trusts’ principal ETH, SOL or AVAX holdings.
Other disclosures continue to permit token sales for separate purposes including redemptions, fees and expenses. The amendments establish that earned staking consideration will be converted to cash but do not predetermine how many tokens or how much dollar value will be sold during a particular distribution period.
As of June 30, the funds reported the following asset and staking positions:
Those staked balances are principal positions rather than the amount subject to recurring sales. The conversion requirement covers rewards generated by those positions. The reports do not provide current annualized reward rates, and future sales and distributions will depend on rewards actually received, the amount staked, protocol-level reward rates, token values and applicable deductions.
Fee structures also differ across the three products:
The annual Sponsor fees and reward deductions use different calculation bases and should not be treated as additive percentages. ETHE has already provided an operating example of the reward-conversion model: the fund distributed approximately $9.4 million, equal to $0.083178 per share, on Jan. 6, 2026, after selling staking rewards earned from Oct. 6 through Dec. 31, 2025. Different asset balances, staking participation, fees, reward rates and token values make that payment unsuitable as a forecast for the three funds.
We’ve launched the all-new COIN360 Perp DEX, built for traders who move fast!
Trade 130+ assets with up to 100× leverage, enjoy instant order placement and low-slippage swaps, and earn USDC passive yield while climbing the leaderboard. Your trades deserve more than speed — they deserve mastery.
Cash Payouts Carry Separate Tax Treatment
The cash-conversion structure can produce several potential U.S. tax consequences under ETHE and GSOL tax disclosures. Assuming grantor-trust treatment applies, a U.S. holder is generally treated as receiving a pro rata share of staking income when the trust earns it. A later sale of reward tokens to finance the cash distribution can also allocate a pro rata capital gain or loss to the shareholder.
Under the treatment described in the filings, receipt of the distributed cash itself should not constitute an additional taxable event. The disclosures caution, however, that grantor-trust treatment is not guaranteed. They also identify potential unrelated business taxable income for certain tax-exempt holders and unresolved sourcing or withholding questions for non-U.S. investors.
The two Grayscale developments occurred within the same regulatory filing window but were not presented as causally connected. The staking amendments were executed before the altcoin withdrawal requests, while both sets of actions reached filings over the following day. The staking-distribution development was released Aug. 11, 2026 at 12:30 a.m. GMT, following the Aug. 10 publication of the ADA, DOT and HBAR withdrawal development.
This article has been refined and enhanced by ChatGPT.
