May 14, 2025
I am writing in strong support of the proposed rule change to allow the Franklin Ethereum ETF to participate in staking activities and accept in-kind creation and redemption of ETH. As a long-time ETH holder who personally stakes my tokens, I can attest to the practical and tax-related challenges faced by retail investors in managing direct participation in Ethereum staking. Specifically: Tax Complexity: Tracking staking rewards for income and cost basis reporting is burdensome and inconsistent, requiring third-party tools and risking IRS audit scrutiny due to a lack of standardized reporting. Suboptimal Staking Rewards: I receive lower-than-market rewards as a solo participant with no leverage to negotiate favorable validator rates or benefit from economies of scale. In-Kind Transfer Efficiency: Like with the iShares Bitcoin Trust, in-kind transfers into the ETF would allow me to defer taxable gains, reduce frictional costs, and streamline tax reporting obligations. Security and Custodial Integrity: Moving staked ETH into a regulated institutional vehicle enhances custody security and avoids personal hardware and slashing risks. Market Fairness: An ETF that handles staking equitably and efficiently opens institutional-grade yield opportunities to ordinary investors. I urge the Commission to approve this important and investor-friendly proposal Regards, Jeff Kleban Email: [REDACTED]