In a significant move, Fidelity, a leading U.S. asset management firm with $4.9 trillion under management, has amended its S-1 application with the SEC for the approval of its spot Ethereum ETF. This adjustment is anticipated to increase the likelihood of approval, with senior ETF analysts now estimating a 75% probability of passage.
The latest amendment notably excludes a previously included clause regarding Ethereum staking. Initially, Fidelity’s filing indicated that the fund intended to stake a portion of its assets through infrastructure providers. The previous version of the application also highlighted that staking rewards would be treated as taxable income, creating a taxable event for investors without corresponding distributions from the fund.
The removal of the staking clause appears to address concerns about these additional risks, simplifying the fund’s structure and possibly aligning it more closely with SEC expectations. Industry experts suggest that the complexities and uncertainties associated with staking have been a major hurdle in the approval of spot Ethereum ETFs. By eliminating this aspect, Fidelity might be mitigating perceived regulatory risks, thus enhancing the chances of the ETF’s approval.
What’s wrong with staking ETH?
The SEC has shown caution regarding staking, given its potential classification of staked Ethereum (sETH) as a security, which adds another layer of regulatory scrutiny. By excluding staking from its ETF proposal, Fidelity is likely aiming to present a more straightforward product that adheres strictly to the existing regulatory framework for nonstaked assets.
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Fidelity’s push for approval comes at a pivotal time for the cryptocurrency market, which is eager for institutional-grade investment products. The approval of a spot ETH ETF would mark a significant milestone, providing investors with a regulated, accessible means to gain exposure to the major altcoin.
