Fidelity’s Bold Move: Is Staking the Future of Ethereum ETFs?

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In the midst of a tempestuous market, where fortunes rise and fall like the leaves in autumn, a few asset managers, with their minds as sharp as a scythe, have begun to ponder the unthinkable. Among them, Fidelity Investments has embarked on a venture that may very well alter the landscape of the Ethereum ETF market forever.

“A Second Attempt” at Staking Approval

In a move that could only be described as audacious, Fidelity has taken the plunge, filing to incorporate a “staking” option into its Ethereum ETF product. Their partner in this endeavor, the CBOE, has dutifully submitted the necessary paperwork to the U.S. Securities and Exchange Commission (SEC). Should the regulators, in their infinite wisdom, grant approval, Fidelity might commence staking activities for its crypto-based fund as soon as this very year. Ah, the sweet scent of ambition!

This push for staking is not merely a whim of Fidelity; it is part of a grander scheme by Ethereum ETF issuers to make staking accessible to the common investor. The approval from the regulatory body would herald a monumental shift in the U.S. policy regarding the crypto sector, akin to a new dawn breaking over a weary land.

Remarkably, within a mere two months of the new U.S. administration taking the reins, a notable shift has occurred. The winds have turned favorably towards crypto assets, with the establishment of a strategic Bitcoin Reserve, as if the government had suddenly decided to embrace the future with open arms.

Yet, before the SEC bestowed its blessing upon the spot Ethereum ETF in May 2024, allowing trading to commence in July, Fidelity found itself in a precarious position. They had to amend their filing, a task akin to a farmer tending to his crops, to exclude any mention of staking. This maneuver was essential to prevent the then-Gary Gensler-led SEC from classifying the ETF as a security under the Howey Test, a hurdle that had previously barred asset managers from offering staking rewards to investors. Oh, the irony of regulations!

Regulatory Decision Could Reshape Crypto ETFs

Analysts, those ever-watchful hawks, are keenly observing what the SEC will decide under this new administration, which has recently donned a crypto-friendly cloak. It is a curious spectacle, indeed!

It is also noteworthy that the New York Stock Exchange (NYSE) filed a similar request with the SEC on behalf of Grayscale earlier in February, seeking approval to allow staking in its Grayscale Ethereum Trust ETF (ETHE) and Grayscale Ethereum Mini Trust ETF (ETH). The SEC, in its usual fashion, acknowledged these filings but has yet to grant approval. Meanwhile, the decision on BlackRock’s Ethereum ETF options has been delayed, leaving many to wonder if the regulators are simply playing a game of chess with the future of finance.

As the proposals linger in the limbo of review, a favorable decision would not merely be a nod of approval; it would signify a seismic shift in policy, one that could reshape the very fabric of crypto ETFs. And so, we wait, with bated breath and a hint of sarcasm, for the next chapter in this unfolding saga.

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2025-03-11 19:40