Fidelity Seeks SEC Approval for Spot Ethereum ETF with Staking

Asset management giant, Fidelity has filed for approval of a spot Ethereum ETF that would uniquely allow investors to earn staking rewards. This is suggested to revolutionize institutional investment in Ethereum.

The $4.5 trillion firm submitted a Form S-1 registration statement to the U.S. Securities and Exchange Commission (SEC) on Wednesday for the proposed Fidelity Ethereum Fund.

If approved, the ETF would issue shares tradable on the Chicago Board Options Exchange (CBOE) that directly track the price of Ethereum itself while additionally paying out rewards generated from the blockchain’s proof-of-stake consensus mechanism.

Milestone Bitcoin ETF Approvals and Joining the Ethereum ETF Race

The filing comes on the heels of the SEC’s historic decision earlier this year to greenlight the first spot Bitcoin ETF products in the United States. Fidelity was among the 11 issuers that secured approval for a spot Bitcoin ETF, products that have catalyzed immense growth and institutional adoption in the crypto markets.

Bitcoin skyrocketed to a new all-time high above $73,000 in March following the ETF approvals. With many experts predicting an Ethereum offering was only a matter of time after that milestone, Fidelity has now taken the first major step by filing for a staking Ether ETF.

While Fidelity originally filed for a spot Ethereum ETF back in November, joining firms like BlackRock, VanEck, and Ark Invest in the race, this latest filing incorporates the unique staking feature.

This would allow ETF shareholders to effectively act as validators on the Ethereum network and earn newly issued ETH tokens without any active management.

Potential Regulatory Hurdles

However, the SEC’s regulatory stance regarding Ethereum’s legal status as a potential security has introduced some uncertainty around approval prospects. The regulator has initiated legal actions asserting that Ether should be classified as a security under the Howey test, which could complicate or prevent an ETF from being approved.

Despite these concerns, some legal experts like Grayscale’s Craig Salm remain optimistic that Ethereum ETF approvals are forthcoming. Salm argues that the extensive review process for the recently approved Bitcoin ETFs established a framework that should streamline approvals for Ether-based products going forward.

Fidelity’s status as one of the world’s largest asset managers with $4.5 trillion in assets under management makes its Ethereum ETF filing a particularly significant development.

If approved, it could pave the way for a tidal wave of institutional investment flooding into the Ethereum ecosystem.