Trust has filed an S-1 application with the US SEC for spot ETH EFT

Fidelity filed an S-1 filing with the United States Securities and Exchange Commission (SEC) on March 27 to create an exchange-traded fund (ETF) based on the spot ether (ETH). As expected from the previous filing, the ETF offers the option to share the ETH portion that Fidelity holds.

The asset management giant's ETF trades on the Cboe BZX exchange. Fidelity Digital Asset Services, an affiliate of FD Fund Management Sponsor, serves as the Trust's ETH custodian. According to S-1:

Trust [fund] It intends to establish a program to share a portion of the Trust's assets through one or more infrastructure providers.

This decision poses an additional risk, the application pointed out. While the stock is in progress, there may be risks of loss and financial loss on “slashing” penalties. Additionally, stock awards are treated as income by the fund for tax purposes, resulting in investors receiving a taxable event “in the absence of a distribution related to the trust.”

The application does not specify the expected fees for the ETF. If there is a fork, the custodian decides which chain the currency supports.

There are several other risks associated with ETFs. The form suggests that regulatory actions in the United States and elsewhere could adversely affect the Fund. Among the possible reasons for the breach of trust, he lists regulatory actions such as the SEC's designation of the fund as an investment company in 1940, the US Commodity Futures Trading Commission's designation of the fund as a commodity pool under the commodity market. Act and determination that the Fund is a financial services business under the US Treasury Department's Financial Crimes Enforcement Network Act.

It is reported that the SEC is investigating the Ethereum Foundation, which analysts say could affect the possibility of approval of the ETH ETF. There has also been political opposition to separating ETH from EFT.

Related: SEC radio silence on Ethereum ETF ‘not a good sign' – Bloomberg analyst

The Ethereum blockchain is also responsible for 51% of attacks, a bad actor can take control of the network with a majority vote. According to the form, “the three largest pools control nearly 50% of the Ether network.” Lido DAO is the largest ETH storage pool, accounting for 31.5% of all ETH.

Analysts have said that the introduction of spot ETH ETFs may reduce the impact of DAOs, but creates a new “concentration risk” in how ETFs choose to distribute ETH among stakeholders.

The SEC pushed back the approval deadline for other ETH ETFs to May 23rd. Eight applicants for spot ETH EFT are awaiting SEC decision.

Magazine: Ether EFAs Face Senate Opposition, Wright Satoshi Doesn't, and Denkun Goes Live: Hodler's Digest, March 10-16