Grayscale plans quarterly cash payouts from ETH and SOL staking rewards

Grayscale Investments has proposed amendments to the trust agreements for its Grayscale Ethereum Staking ETF, ETHE, and Grayscale Solana Staking ETF, GSOL, that would require staking rewards to be converted into cash and distributed to shareholders at least quarterly. The changes were outlined in separate Form 8-K filings dated July 17 and are expected to be executed on or around Aug. 7. Under the proposed framework, each trust could deduct expenses not assumed by the sponsor, including compensation to Grayscale for arranging staking, before distributing net proceeds, and payout amounts would vary with rewards earned during each period. Grayscale said the revisions are intended to align the funds with IRS Revenue Procedure 2025-31, which permits qualifying grantor trusts to engage in staking while preserving their U.S. federal income tax treatment if net rewards are distributed at least quarterly in digital assets or cash. The firm chose cash distributions. The filings also said quarterly payouts would not defer shareholders' U.S. tax obligations, because investors would generally recognize staking rewards as taxable income when the trusts receive them, while token sales used to fund payouts could generate capital gains or losses. GSOL currently stakes 100% of its SOL holdings and is generating gross annual staking rewards of about 6.1%, while Grayscale reduced its sponsor fee for GSOL to 0.19% from 0.35% and its staking fee to 7% from 23%, effective June 25. The amendments still face standard SEC review before the Aug. 7 target date.