Important points
Microsoft is potentially interested in exploring crypto investments such as the Spot Ethereum ETF with staking. Currently, US Ethereum ETFs do not have staking functionality due to SEC regulatory concerns.
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Although Microsoft has rejected a proposal to invest in Bitcoin, the company may be open to exploring other crypto investment opportunities. Matthew Siegel, head of digital asset research at VanEck, said Microsoft may be more inclined to consider investing in an Ethereum ETF if the product includes staking functionality.
Siegel spoke at the company's annual general meeting on Tuesday, when shareholders overwhelmingly rejected a proposal to adopt Bitcoin as a financial asset, a move made by Microsoft Chief Financial Officer Amy Hood. I recognized this potential openness in my comments.
Hood said Microsoft has accepted cryptocurrencies as payment since 2014 and is considering cryptocurrencies as an asset class. However, he noted that the priorities are liquidity, capital preservation and income generation from investments.
“Our finance team, in conjunction with our board of directors, considers all asset classes available to us. It is important to remember our balance sheet and cash balance metrics and targets, and importantly and to ensure that we have a lot of liquidity to support our operations and fund our operations, partnerships and investments,” Hood said. “So, in addition to generating revenue, liquidity is also a very important criterion for us.”
Siegel speculated that Microsoft might be interested in an Ethereum ETF that allows investors to participate in Ethereum staking and earn rewards.
When asked to elaborate on the reasons for this, he noted that the tech giant believes in the utility of cryptocurrencies, and that the board has “already evaluated and will continue to evaluate digital assets as a reserve fund.” did.
Siegel also noted that assets that offer yield are likely to be considered for acquisition by Microsoft.
Currently, US-based Ethereum ETFs do not include staking functionality. This is due to regulatory concerns that staking services may be unregistered securities products.
However, securities regulators may be willing to discuss Ethereum ETFs with staking capabilities with the incoming Trump administration and anticipated new leadership at the SEC.
SEC Commissioner Hester Pearce suggested that discussions around staking and other features may be revisited.
Incorporating staking into an Ethereum ETF could reduce management fees to near-zero levels. This will make these ETFs more attractive to investors as they can earn rewards while minimizing costs.
Analysts believe that allowing staking within Ethereum ETFs could allow them to compete more effectively with Bitcoin ETFs, which currently dominate the market.
Nate Geraci, president of ETF Store, believes that spot Ethereum ETFs that include staking are “a matter of when, not if.”
“There have been indications that the Trump administration will become more crypto-friendly, which could certainly speed up when staking is allowed. “We will have to wait for the regulatory framework to be in place, which is likely to take quite a long time,” he explained.
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