Fidelity Files For Spot Ethereum ETF, Includes Staking

Fidelity, an asset management company, has put forward a plan for a new Ethereum exchange-traded fund (ETF) that includes staking to the Securities and Exchange Commission (SEC). This move comes after the approval of the first Bitcoin ETF.

The Fidelity Ethereum Fund aims to mirror Ethereum’s price movements, offering an additional advantage through its built-in staking function.

Fidelity Files for Ethereum ETF 

Fidelity’s proposal for a Bitcoin ETF follows the Securities and Exchange Commission’s green light on such products. Fidelity was among the first companies to apply for this innovative financial instrument. The SEC’s approval of spot Bitcoin ETFs has significantly boosted Bitcoin’s price, reaching an all-time high of $73,000. Some market analysts believe that a similar ETF for Ethereum is a likely next move.

“Fidelity, a large asset manager worth $4.5 trillion, recently submitted an S-1 form to the Securities and Exchange Commission (SEC) for a potential Spot Ethereum ETF that includes staking.”

Starting soon, investors can purchase shares of the Fidelity Ethereum Fund through the Chicago Board Options Exchange (CBOE), and this fund will offer a distinctive new function: staking. This means that investors will be able to earn incentives by participating in this feature. According to the company’s announcement in its filing.

In simpler terms, the Fidelity Ethereum Fund is an exchange-traded product that aims to be listed and traded on the Cboe BZX Exchange. Its goal is to mirror the performance of ether, as indicated by the Fidelity Ethereum Reference Rate, while accounting for its own costs and obligations.

Potential Delays

Fidelity has submitted a second proposal for a Ethereum spot ETF, joining filings from BlackRock, ARK Invest, and VanEck in November 2023. Yet, securing approval isn’t certain due to the complex regulatory hurdles still looming ahead.

The Securities and Exchange Commission has made it clear that they are actively pursuing a legal challenge to Ethereum being classified as a security. This raises serious questions about the possibility of approved Ethereum spot ETFs in the future. However, industry insiders like Craig Salm, Grayscale’s Chief Legal Officer, remain hopeful despite the SEC’s unfavorable position.

Salm indicated towards the location where Bitcoin ETF acceptance had occurred, implying that past discussions might facilitate a smoother approval pathway for Ethereum ETFs at that place.

“The SEC has addressed all the similarities between listing a Bitcoin ETF and an Ethereum ETF. The main variation lies in the fact that the ETF holds ether instead of bitcoin. Therefore, the SEC has already taken significant steps in this regard, leaving fewer hurdles for issuers to overcome.”

In Salm’s perspective, the Bitcoin ETF encountered various challenges, which were later resolved by involved parties. He is optimistic that the next time around, the process will be less complicated since the primary distinction lies in the type of asset the ETF represents.

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2024-03-28 12:05