Fidelity files Form S-1 for Spot Ethereum ETF.
Established asset management firm Fidelity has filed an S-1 filing for the proposed location, according to its filing with the US Securities and Exchange Commission (SEC).
Staking Ethereum has made headlines in the ongoing legal battle between Coinbase and the SEC.
Is ETH next to EFT?
According to the application note, the Fidelity Ethereum Fund (Fidelity) will trade on the CBOE BZX exchange if approved. Fidelity has appointed Fidelity Digital Asset Services as the fund's custodian.
The Trust plans to implement a limited share program for ETH holdings. However, Fidelity states that staking comes with risks of losing ETH through penalties or temporary access.
“Staking activity comes with the risk of losing Ether, including in the case of “slashing” penalties. In addition, as part of the “activation” and “exit” processes of Ether staking, any stored Ether will be unavailable for a certain period of time depending on various reasons, which poses a certain liquidity risk to the sponsor. causes. [FD Fund Management] will manage,” the document reads.
Additionally, cashing out awards may be considered taxable income by the IRS. However, the Fund may not necessarily distribute the stock awards it earns directly to investors.
The filing lists several risk factors related to the trust, including Ethereum price volatility, technical risks, governance challenges and unexpected upgrade and fork issues, among others. One of the main concerns is the regulatory approach to ether in the US and other regions.
Ethereum's legal status in US jurisdictions is unclear. There are mixed positions on this issue. The Commodity Futures Trading Commission (CFTC) considers Ether a “commodity”. The agency recently reiterated this claim in KuCoin's latest legal document.
Meanwhile, the SEC is reportedly looking to classify Ether as a security. The agency has reportedly launched an investigation into the Ethereum Foundation as part of its regulatory campaign to place the cryptocurrency under this category. However, no further details about the investigation have been confirmed.
The file suggests 51% and denial-of-service attacks, which could endanger the Ethereum network and negatively affect its price. The 51% attack has been discussed for a long time, especially after the merger. Crypto members have repeatedly warned about centralized power pools that sit on top of stored ether, such as Lido.
Spot Ethereum ETFs May Face Pushback
Fidelity, BlackRock and seven other firms are filing the SEC's ruling on their position on Ethereum ETFs. However, progress toward a final trial appears to have stalled.
Earlier this month, the SEC decided to postpone its decision on Fidelity and BlackRock's applications. Meanwhile, the agency did not comment much on the review process, which is considered to be different from spot Bitcoin ETFs.
Bloomberg ETF analyst James Seifert predicts that the current lack of interaction between the SEC and ETF providers will result in the rejection of spot Ethereum ETFs. His counterpart, Eric Balchunas, had earlier cut his chances of approval to 35%.
On the other hand, BitMEX founder Arthur Hayes and Grayscale Chief Legal Officer Craig Salm think differently. These two notables are still giddy about the potential acceptance for the spot Ethereum fund.
In an interview with The Wolf of All Streets, Arthur Hayes said that the success of Bitcoin ETFs could pave the way for similar ETFs for Ethereum and Solana. He believes that banks support these because of the profits they make from fees.
While he doesn't hold the same view, Craig also believes the approval is positive. They argue that the SEC's experience with spot Bitcoin ETFs can be applied to Ethereum ETFs, despite the SEC's lack of public involvement.
