Fidelity Investments has taken another step in its effort to launch a spot Ethereum ETF, filing a registration statement on March 26 despite the uncertain regulatory landscape.
The move follows a previous filing by Cboe, the exchange planned for this ETF, which submitted a form 19b-4 to the SEC on Fidelity’s behalf in November 2023.
Fidelity’s actions, alongside those of other firms aiming to introduce spot ether ETFs, illustrate the growing interest in integrating digital assets into traditional financial products. Yet, obtaining regulatory approval presents a notable challenge, highlighting the evolving and uncertain nature of crypto regulation.
S-1 filing
The company’s recent Form S-1 filing marks an essential step in seeking SEC approval for the Fidelity Ethereum Fund to begin trading. The regulator must approve both the 19b-4 and S-1 forms before the fund can trade,
Fidelity’s latest submission did not disclose the fund’s details, such as the ticker and fees. However, it detailed the fund’s intention to stake a portion of its assets with one or more staking infrastructure providers, anticipating that staking rewards of ether could count as income for federal income tax purposes.
Fidelity Digital Asset Services, serving as the fund custodian, will exclusively maintain the private keys associated with any staked ETH, ensuring security for the fund’s operations.
The regulator is expected to decide on ETFs that directly hold ETH by late May. However, industry experts predict the SEC may not be as open to Ethereum as Bitcoin.
Uncertain landscape
The SEC’s approval of spot Bitcoin ETFs in January led to expectations of a potential opening for other cryptocurrency-based investment products. However, the regulator said at the time that the approval did not mean the regulator had softened its stance toward the digital asset industry.
The Ethereum Foundation recently revealed it was under scrutiny by an unnamed “state authority,” triggering concerns about the impact on Ethereum’s future and the approval of related ETFs.
The inquiry has led to speculation about its implications for Ethereum’s market performance and regulatory status.
Meanwhile, Republican lawmakers are pressing the SEC for clarity on Ethereum’s regulatory classification, highlighting the need for definitive guidance to mitigate market uncertainties.
Despite this, the industry remains optimistic about the approval of Ethereum ETFs, citing previous engagements with the SEC over Bitcoin ETFs as a positive precedent.
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