Grayscale turned more than $1.1 billion of staked crypto into a recurring reward-sale machine for ETF holders

Grayscale has formalized a mandatory minimum cadence for converting staking rewards from three crypto exchange-traded products into cash and paying the net proceeds to shareholders.Trust amendments executed Aug. 6 for the Grayscale Ethereum Staking ETF (ETHE), Grayscale Solana Staking ETF (GSOL) and Grayscale Avalanche Staking ETF (GAVA) require each product to reduce “Staking Consideration” to cash no less often than quarterly. Net proceeds must then be distributed promptly after applicable fees and trust expenses.The three trusts currently intend to make distributions monthly, according to Form 8-K filings submitted Aug. 7, but the binding floor is quarterly.As the trusts receive staking rewards, they must periodically sell that earned consideration and pass the resulting cash to investors. The rule therefore creates a recurring market sell flow for reward tokens.It does not create scheduled liquidation of the trusts’ principal ETH, SOL or AVAX holdings. The distribution clauses apply to staking consideration earned by the products. Other disclosures still permit token sales for separate purposes, including redemptions, fees and expenses.The amendments establish that reward token...