Animal Spirits Podcast: "Talk Your Book: Staking Your Crypto For Yield"
Date: November 24, 2025
Hosts: Michael Batnick & Ben Carlson
Guest: Krista Elich, Senior VP ETF Capital Markets, Grayscale
Overview
In this episode, Michael, Ben, and guest Krista Elich from Grayscale dive into the evolving landscape of staking crypto for yield, particularly via ETFs. They unpack recent IRS guidance and what it means for both institutional and retail investors. The discussion moves from the basics of staking, risks and rewards, new product developments, crypto market sentiment, and how the ETF ecosystem for crypto is maturing.
Main Topics & Discussion Points
1. Explaining Staking and Yield in Crypto (00:44 - 07:07)
- Michael and Ben discuss how hard it has been to grasp and explain staking in non-technical terms.
- Ben tries to explain staking as “putting up your asset as collateral and in return earning a yield, more of that asset.” (01:26)
- Krista Elich clarifies: Staking is "pledging your token to make the underlying protocol more safe and secure, and in return you get paid in kind — more of that token." (04:53 - 05:23)
- Example: Staking Solana yields can be around 7% annually. (05:39)
- Difference between ETF and ETP:
- Briefly discussed, with Michael joking, “Is ETP just like the Winnie the Pooh with the monocle?” (02:04)
Notable Quote
"Staking is basically when a holder of that token pledges it to make the underlying protocol more safe and secure, and in return, they get paid in kind."
—Krista Elich (04:53)
2. New IRS Guidance and Its Market Impact (03:36 - 06:53)
- Krista explains new IRS guidance: Grantor trusts (which structure most crypto ETFs) can now stake assets and distribute staking rewards.
- Distribution to investors: Guidance suggests staking rewards may be distributed as dividends/distributions to ETF holders, but more details will come as guidance is digested. (06:13)
Notable Quote
"The products are able to stake their assets, they are getting tokens back which are at this stage sitting in those ETFs that are staking. Eventually ... [the] issuers [will] pay that out to holders of the ETP in the form of a distribution."
—Krista Elich (06:42)
3. Risks of Staking Crypto (06:53 - 10:54)
- Locked Assets: When staking, assets are non-transferable for a period (up to 40 days for Ethereum), which can conflict with ETF redemption cycles (T+1 or T+2 settlements).
- Slashing risk: Validators can be penalized for misconduct, though Krista notes this has been virtually nonexistent at the institutional level.
- ETF vs. DIY: With ETF-based staking, investors don’t need to take any action — the process and risks (especially around liquidity) are largely managed at an institutional level.
Notable Quote
"If you're staking your own Ethereum... it's going to take you 40 days potentially to get liquidity, versus if you are holding an Ethereum ETF, you can trade that freely on secondary markets."
—Krista Elich (10:35)
4. Crypto ETF Market Landscape (10:54 - 14:43)
- Expansion of Crypto ETF Products: SEC approval for generic crypto ETF listing standards allows for 10-15 tokens to become eligible as ETPs soon.
- **Solana ETFs have launched despite government shutdown, showing creative legal workarounds.
- Investor base: Started as a “barbell” of retail and sophisticated hedge funds, but is now expanding to more mainstream advisors and platforms due to evolving diligence and trust in products.
Notable Quote
"We have seen two Solana products go live during the government shutdown... demand does exist and I think that we're also going to see demand for some of these other tokens coming to market."
—Krista Elich (11:27)
5. Custodial Infrastructure for Crypto ETFs (14:43 - 15:53)
- Custody mostly managed by Coinbase, with move toward diversification. Krista notes that using multiple service providers for staking is likely to become more common as the sector matures.
6. All-in-One & Diversified Crypto Products (15:53 - 16:58)
- Introduction of DDLC: Grayscale’s diversified crypto fund, holding the top five assets by market cap (excluding meme coins and stablecoins), giving investors exposure to 90% of the crypto market returns.
- Market cap weighted: Heavy on Bitcoin/Ethereum, with exposure to “altcoin tail.”
7. Crypto Fundamentals: Proof of Work vs. Proof of Stake (16:58 - 18:57)
- Bitcoin cannot be staked: It uses Proof of Work (PoW), unlike Ethereum/Solana (Proof of Stake).
- PoW: New tokens are minted by solving complex computational puzzles (i.e., mining).
- PoS: New tokens generated by pledging assets to secure the network.
Notable Quote
"Proof of work is basically... mining. Wordle for the blockchain... Proof of stake is when holders... actually pledge [the coin] in order to make the ecosystem more safe and secure."
—Krista Elich (17:46)
8. Krista's Journey from TradFi to Crypto (18:57 - 20:30)
- Krista shares her move from fixed income ETFs to crypto, noting surprising conceptual overlaps and the excitement of building out ETF infrastructure in the emerging crypto space.
9. Current Crypto Sentiment (12:33 - 13:21; 20:30 - 21:34)
- Crypto-native sentiment is “bad” due to asset price declines and regulatory delays (e.g., government shutdown); momentum expected to return as progress resumes.
- Institutional adoption and ETF buying continues: Despite volatility and profit-taking in the market, inflows remain robust.
Notable Quote
"We have glimpses where I agree, I think that Bitcoin is becoming a mainstream asset. But we have these moments where ... they kind of revert back to being these smaller, more tail-ish assets. And that's just part of them maturing."
—Krista Elich (26:59)
10. The Future: Derivatives, More Sophisticated Products & Target Date Funds (22:16 - 26:10)
- **Growing demand for covered calls, derivatives, and multi-token products in crypto ETF space.
- Target date funds: Not mainstream yet, but advisors and platforms are starting to warm up to allocations (e.g., 1-5%) in digital assets, as education and familiarity increases.
- “If you put 1% of your client’s assets into crypto and it goes down by 50%, that’s a small portion... If it’s up 10x, that’s meaningful.” (24:21)
Additional Memorable Moments
- On explaining ETF yields:
- "You get the yield. That's all I need to know, right?" —Michael Batnick (10:05)
- "Ben totally doesn't gotcha." —[laughter, echoing the complexity of staking concepts] (10:00)
- Historic barriers breaking down:
- "Less than two years ago you were hiding your key in your book, in your library. ... That’s totally unnecessary now that you can just click in your brokerage account and buy a Bitcoin ETF." —Krista Elich (27:24)
Where To Learn More
- Krista Elich recommends: Visit grayscale.com for resources and education or direct outreach. (28:37)
Overall Tone:
Accessible, candid, and slightly irreverent—balancing technical depth with humor and perspective for both crypto newbs and seasoned investors.