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Fidelity Amends Spot Ethereum ETF Application, Includes Staking

Fidelity Amends Spot Ethereum ETF Application, Includes Staking

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Money management giant Fidelity has updated its spot Ethereum ETF application to the United States Securities and Exchange Commission to include staking. 

Fidelity wants to give traders of its potential Fidelity Ethereum Fund the ability to stake some of their assets and earn additional income. 

Fidelity Updates Spot Ethereum ETF Application 

Fidelity filed a 19b-4 amendment with the Securities and Exchange Commission (SEC), stating that if the spot Ethereum ETF were to be approved, Fidelity would like to stake an undisclosed amount of its assets through one or more of its staking partners. Fidelity stated in its amended filing, 

“According to the Registration Statement, the Sponsor may, from time to time, stake a portion of the Fund’s assets through one or more trusted staking providers, which may include an affiliate of the Sponsor (“Staking Providers”). In consideration for any staking activity in which the Fund may engage, the Fund would receive certain network rewards of ether tokens, which may be treated as income to the Fund as compensation for services provided.”

However, Fidelity has not yet disclosed a specific staking provider. Several ETH staking providers, including RocketPool, StakeWise, and Lido DAO, are currently in the market. 

Delays In Approval?

According to Chanchal Samadder, a key attraction for ETH institutional investors is its staking yield. Staking allows investors to earn rewards for simply holding Ethereum. However, Samadder believes that staked ETH ETFs will face some delays in approval. 

“We anticipate that staked ETH ETFs will face delays in approval in the US, unlike Europe where these products are readily accessible to investors.”

Approval Inevitable 

The Securities and Exchange Commission had delayed its decision to approve BlackRock’s spot Ethereum application. The commission now has until May 23 to approve or reject VanEck’s spot Ethereum application. Despite the delays, many are optimistic about the SEC approving more crypto products, including Ethereum ETFs, primarily due to growing demand. Hector McNeil, the co-CEO and co-founder of Hanetf, stated, 

“I think it is inevitable that Ether will be next. If Bitcoin can be approved and meets all the liquidity and asset class thresholds, then Ether qualifies.”

The Securities and Exchange Commission approved nearly a dozen spot Bitcoin ETFs, causing a frenzy in the market. Demand for Bitcoin ETFs continues to grow. One of the approved spot Bitcoin ETFs is the BlackRock iShares Bitcoin Trust, trading under the symbol IBIT. 

Other Spot Ethereum ETF Applications 

Fidelity is one of eight firms that have applied for a spot Ethereum ETF, all awaiting SEC approval. One of the applicants, Ark21 Shares, also added plans to stake a portion of its proposed funds ETH. This was done just days after Franklin Templeton entered the spot Ethereum ETF race and also outlined its intention to stake a portion of the ETF’s ETH. Other firms that have applied for an ETF include BlackRock, Cathie Wood’s ARK Invest, and crypto asset manager Grayscale. 

Suppose the Securities and Exchange Commission does not approve all eight spot Ethereum ETF applications by May 23. In that case, the entire roster of prospective issuers will have to refile their applications at a later date. Bloomberg ETF analyst Eric Balchunas has put the likelihood of a spot Ethereum ETF approval by Van Eck’s May 23 deadline at only 35%.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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