Institutional Staking Shifts Following SEC Rule Debut and Node Expansion

New SEC pathways for digital asset custody

The SEC’s October 1, 2026, proposal introduces two new custody pathways for registered investment advisers and regulated funds to manage digital assets without relying solely on traditional qualified custodians. One pathway allows for self-custody if the adviser maintains sufficient technological infrastructure and internal controls. Another option permits the use of state-chartered trust companies to hold digital assets. These changes target the regulatory uncertainty that previously hindered the adoption of crypto assets by traditional firms. The Commission has not yet settled the specific conditions for these new options. The SEC proposal aims to resolve the long-standing custody gap where traditional qualified custodians lacked the infrastructure to manage private keys or facilitate on-chain settlement for digital assets. This regulatory shift follows years of uncertainty regarding how digital assets fit within the existing Advisers Act framework. The SEC previously proposed amendments to the Custody Rule in 2023, but the Commission withdrew that proposal in June 2025. This new framework replaces the previous enforcement-heavy approach with a clear pathway for advisers and funds.

Figment scales infrastructure through diverse partnerships

Figment operates as a non-custodial staking provider for over 1,000 institutional clients. Its integration with Coinbase Prime allows clients to stake assets on Solana, Sui, Aleo, Aptos, Avalanche, Axelar, Cardano, Celestia, Cosmos, EigenLayer, NEAR, and Polkadot. This partnership supports over $2 billion in staked assets and allows clients to stake tokens without moving assets from Coinbase’s custody. Figment also works with Fireblocks to support 20+ Proof-of-Stake blockchains. Clients can use the native Fireblocks UI or integrate via API in three to seven days. The partnership with Ripple Custody also enables banks to access staking for Ethereum and Solana.

MetaMask Institutional included Figment in its marketplace in 2023, providing access to five aggregated providers. Morgan Stanley also uses Figment as a staking provider for its Morgan Stanley Ethereum Trust and Morgan Stanley Solana Trust. These funds began trading in 2026 and provide exposure to the two largest Proof-of-Stake networks. Figment remains a primary choice for institutions because it provides the infrastructure to run validators across many networks. The company maintains SOC 2 Type II and ISO 27001 certifications to meet institutional security requirements.

Divergent reward models for asset managers

Different asset managers utilize different reward distribution models when they partner with staking providers. Fidelity’s Ethereum Fund (FETH) filing describes a plan to stake up to 100% of its ETH holdings. Under this plan, Fidelity retains 85% of gross staking rewards, while the remaining 15% goes to the fund sponsor, custodian, and node operators like Figment and Blockdaemon. This 15% allocation to node operators results in a higher cost for investors than the 5% allocation used by Morgan Stanley. Morgan Stanley’s funds aim to pass 95% of staking rewards to shareholders. Grayscale’s ETHE also uses staking, but its gross yield of 2.75% falls to 2.11% net after accounting for sponsor and custody arrangements.

The disparity in reward splits shows how firms compete for institutional interest. You should monitor how these different reward splits influence your net returns.

Operational risks in automated staking

Institutions face risks including validator slashing, smart contract vulnerabilities, and liquidity lock-ups. If a validator fails, the network may penalize the staked assets. Staking requires locking up assets, which limits liquidity during market volatility. Ethereum withdrawals can take one day under normal conditions, but validator queues can extend this to several weeks or months. In May, 3.64 million ETH were in the validator activation queue. This queue can create significant delays for funds that need to meet redemptions.

The difficulty of managing private keys without compromising security remains a central concern for advisers. The SEC’s proposal addresses these concerns by updating recordkeeping obligations for those who custody digital assets. Advisers must maintain transaction logs, wallet addresses, and internal control audits. These requirements aim to prevent the type of misvaluation and misleading statements that led to SEC charges against other investment advisers. Will the SEC implement these self-custody and state-trust options before the market moves toward even more decentralized validation models?