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Fidelity Files for Ethereum ETF, How Will SEC Respond?

Published March 28, 2024 11:41 AM
Teuta Franjkovic
Published March 28, 2024 11:41 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Fidelity filed a formal registration statement for Ethereum ETF, marking a significant step towards approval.
  • The proposed ETF plans to stake a portion of its Ethereum holdings.
  • Meanwhile, the SEC’s stance on Ethereum, compared to Bitcoin, remains unclear.

Fidelity Investments is advancing its ambition to launch a spot Ethereum ETF, despite regulatory uncertainties. The company filed  a registration statement on March 27, d by regulatory uncertainties.

This step builds on a previous attempt  where Cboe, the ETF’s designated exchange, submitted a proposal to the United States Securities and Exchange Commission (SEC) on Fidelity’s behalf in November 2023.

SEC Hurdles No Match for Fidelity’s Ethereum Push

Fidelity Investments, alongside other companies eager to launch spot Ethereum ETFs, is pushing to bridge digital assets with traditional finance.

However, navigating the regulatory approvals remains a significant hurdle, reflecting the uncertain landscape of cryptocurrency regulation.

Fidelity Investments has made another significant move towards launching a spot Ethereum ETF by filing a Form S-1 , a crucial step in seeking approval from the United States Securities and Exchange Commission (SEC).

While the filing does not reveal the fund’s ticker or fees, it does outline plans to stake a portion of its assets, potentially treating staking rewards as income for tax purposes.

Fidelity Steps Up for Ethereum ETF Despite Regulatory Hurdles

Fidelity Digital Asset Services will secure the fund’s operations by exclusively managing the private keys for any staked ETH. A decision from the regulator on ETFs directly holding ETH is anticipated by late May, although skepticism exists regarding the SEC’s openness to Ethereum compared to Bitcoin.

In January, the SEC’s green light for spot Bitcoin ETFs sparked hope for more cryptocurrency investment products, despite the regulator insisting its overall stance on digital assets hadn’t changed.

Matters were complicated when the Ethereum Foundation disclosed it was being investigated by a state authority. This, in turn, raised questions about Ethereum’s future and the potential approval of Ethereum-based ETFs.

What Are Possibilities For Ethereum ETF?

Speculation has grown about how this inquiry might affect Ethereum’s market and regulatory outlook. Republican lawmakers have sought clear guidance  from the SEC on Ethereum’s regulatory status, aiming to reduce market uncertainty.

Nonetheless, the industry remains hopeful for Ethereum ETFs, drawing encouragement from prior discussions with the SEC regarding Bitcoin ETFs.

Bloomberg analysts James Seyffart and Eric Balchunas have recently reduced their optimism about the SEC approving an Ethereum ETF by May, now estimating the likelihood at around 35%. They cited  a lack of positive indicators that were present before Bitcoin’s ETF approval.

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