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Sunday, March 31, 2024

Fidelity Joins the Ethereum ETF Race With Staking Option Included

Following the SEC approval of some spot Bitcoin ETFs ↗, many entities have also indicated interest in an ETH ETF. The Boston-based multinational financial company Fidelity Investments joined the race for approval to list a spot Ethereum exchange-traded fund (ETF). 

While advancing its plans, the company has filed an S-1 form with the US Securities and Exchanges Commission (SEC).

Fidelity Submits Its S-1 Form For A Spot Ethereum ETF

As the race for spot Ethereum ETFs intensifies, an X post from Radar revealed that the $4.5 trillion asset manager, Fidelity Investments, is the newest applicant for an ETH ETF approval.

JUST IN: $4.5 trillion asset manager Fidelity filed for a Spot Ethereum ETF with staking included.

US regulator SEC has been reluctant to approve Ethereum ETFs and is unlikely to change unless challenged in court. pic.twitter.com/bdQwCgm1Pf ↗

— Radar🚨 (@RadarHits) March 27, 2024 ↗

Recently, Fidelity filed the S-1 form with the SEC, indicating its intention to issue a spot Ethereum ETF. 

The filing shows that Fidelity selected the Chicago Board Options Exchange (CBOE) as the market for trading the ETH ETF upon approval. However, it didn’t specify the expected fees for the ETF or the ticker name under which it will trade.

Notably, Fidelity is not the only company that has filed for a spot in Ethereum ETF. Other prominent entities like BlackRock, Grayscale, Valkyrie Digital Assets, Franklin Templeton, and WisdomTree Investments are already in the race.

The quest for spot Ethereum ETFs started following the SEC’s approval of 11 spot Bitcoin ETFs in January. 

Most Bitcoin ETFs have recorded impressive performances in the weeks following the approval. According to Coinglass data, the BTC ETFs have amassed $57.9 billion in total AUM as of March 28.

Fidelity Includes ETH Staking In Its Application For Ethereum ETF 

Fidelity Investment took its application further by including an ETH staking program. This means the asset manager proposes to stake a portion of its trust’s assets using one or more staking infrastructure providers.

A part of the application reads:

As a result of any staking activity in which the trust may engage, the trust expects to receive certain staking rewards of Ether, which may be treated for federal income tax purposes as income to the trust.

Additionally, the filing indicated that the Fidelity Digital Asset Service, the fund custodian, will maintain complete control of the staked ether. It will always have exclusive possession and control of the private keys of the staked tokens.

However, the possibility of getting spot Ethereum ETFs is relatively low. The SEC has reportedly opened investigations into several entities with a relationship with the Ethereum Foundation. The aim centers on classifying ETH as a security.

Moreover, some industry experts believe the SEC will implement delay strategies similar to the approval process of spot BTC ETFs. According to Radar, the US SEC has delayed the Ethereum ETF approval and will likely remain adamant unless challenged.

Bitwise CIO Matt Hougan thinks the SEC should delay its approval till December from the anticipated May dates. His argument revolves around establishing a better understanding of the spot BTC ETF within Wall Street before introducing that of ETH.

Kaylie Pferten
Kaylie Pferten
A pilot of submersible crafts in a former life, now married to my husband David and writing about investment advice.

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