American asset management giant Fidelity Investments has filed a new amendment to its spot Ethereum ETF with a staking component added.
As the race for the spot Ethereum ETF continues, Fidelity has joined the cohort of applicants looking to divest the funds’ assets into staking. The company filed the amendment in a Form 19b-4 with the SEC, joining other prospective issuers like Grayscale Investments that have made related filing.
Dubbed the Fidelity Ethereum Fund, the spot ETF will trade under the “BZX Rule Commodity-Based Trust Shares” if the SEC grants approval.
The Need for Ethereum Staking
Since Ethereum transitioned to Proof-of-Stake (PoS) through The Merge, Staking now marks a standard means for investors to get passive income while acting as validators. The push for spot Ethereum ETF by Fidelity Investments will invest primarily in the cryptocurrency.
Fidelity not giving up on #Ethereum ETFs and not giving up on SEC allowing them to Stake within the ETF. Our base case is still that these aren't gonna be approved https://t.co/6ynFvBrvoo pic.twitter.com/yxSLsBbi2C
— James Seyffart (@JSeyff) March 18, 2024
The latest filing seeks permission to extend the investment into Staking pools of “one or more trusted staking providers, which may include an affiliate of the Sponsor (‘Staking Providers’)”
Ethereum Staking is currently a big venture with the leading protocol Lido boasting $32.24 billion in Total Value Locked (TVL), according to data from DeFiLlama. Through staking, Fidelity might earn an additional 3.4% APR if it pitches a tent with Lido for instance. This reward will come in the form of Ether tokens.
“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,” the Fidelity filing reads.
Odds of Spot Ethereum ETF Approval
With the May 23 deadline for VanEck’s application fast approaching, there is a growing concern on whether or not the United States Securities and Exchange Commission (SEC) will greenlight the product for trading as it did for Bitcoin in January.
Despite the differing opinions among market experts, many hinge their convictions on earlier promising comments from SEC Commission Hester Peirce. According to her, the markets regulator will not make similar mistakes as it did in the runup to the approval of Bitcoin ETFs.
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