The U.S. Securities and Exchange Commission (SEC) confirmed receipt of Fidelity Investments’ proposal to introduce staking into its Ethereum exchange-traded fund (ETF).
This is a significant development for the crypto investment landscape, broadening the range of activities investors can perform on ETFs.
The filing, submitted by the Cboe BZX Exchange on March 11, seeks to amend the Fidelity Ethereum Fund (FETH) to allow staking of its ether holdings. Leveraging Ethereum’s proof-of-stake mechanism could potentially enhance investors’ returns.
This new development follows a similar approval for Franklin Templeton’s spot ETH ETF, signifying an increased integration of blockchain-native features into traditional financial products.
Fidelity’s ETH ETF Timeline
Fidelity initially filed for staking in its Ethereum ETF S-1 application in March 2024 but launched the fund without it in July 2024, bowing to regulatory pressure from then-SEC Chair Gary Gensler.
The updated proposal, detailed in a 19b-4 form, outlines staking ether through trusted providers to earn rewards, which the fund would treat as income. This could make FETH, which holds nearly $1 billion in assets, more competitive, offering investors yield without direct crypto management.
Read Also: US SEC Delays Approval of Several Spot Exchange Traded Funds
The SEC’s acknowledgment of the Fidelity Ether Filings under President Donald Trump’s administration follows the SEC’s sharp pivot to pro-crypto policies under new leadership.
Analysts anticipate a friendlier regulatory stance. The move follows Trump’s White House Crypto Summit on March 7, emphasising leadership in digital assets.
If approved, staking in ETFs could bridge traditional and decentralized finance (DeFi), boosting Ethereum’s appeal.
What are Exchange Traded Funds?
An exchange-traded fund (ETF) in the crypto space is a financial product that tracks the price of a cryptocurrency, like Bitcoin or Ethereum, and trades on traditional stock exchanges.
Unlike owning crypto directly, investors buy ETF shares, representing a portion of a fund holding the underlying digital asset. Managed by firms like BlackRock or Fidelity, these funds pool investor money to purchase and securely store crypto, sparing individuals the complexities of wallets and private keys.
Crypto ETFs, such as spot Bitcoin ETFs launched in January 2024, offer regulated exposure, appealing to institutional and retail investors wary of crypto’s volatility or security risks. They trade like stocks, with prices fluctuating based on the crypto’s market value, and can include features like staking (e.g., Ethereum ETFs) to generate yield. Approved by bodies like the SEC, they bridge traditional finance and crypto markets.
