S&P Global Ratings: Spot Ethereum ETFs Have Risks

S&P Global Ratings has warned of potential risks for the Ethereum ecosystem posed by exchange-traded funds (ETFs) based on the second largest cryptocurrency by market capitalization and that block assets in staking.

The agency stated this in a recent report. According to experts, the introduction of spot ETH-ETFs could significantly impact the concentration of validators on the network, either positively or negatively.

Analysts believe that ETF issuers are likely to choose institutional cryptocurrency custodians over decentralized staking services like Lido.

These custodians would be responsible for holding the assets of the ETFs. The report points out that the level of impact on Ethereum’s concentration would depend on whether issuers diversify their holdings among multiple custodians.

“Coinbase is currently the custodian for eight of the 11 recently approved Bitcoin ETFs in the US, and three of the four largest cryptocurrency funds outside the country have named the exchange as their staking institution.