TL;DR
- Fidelity modifies its Ether ETF application, eliminating ETH staking.
- The change follows a possible change in the SEC’s stance on Ether ETFs.
- The classification of staking Ether as a security remains a regulatory concern.
With the race for Ethereum ETFs in full swing, Fidelity Investments has pivoted its strategy by modifying its application for an ETH ETF.
The asset management company has removed the ETH staking proposal from its application, in response to regulatory pressure and possible changes in the stance of the United States Securities and Exchange Commission (SEC).
Here's a list of all entrants in the spot #Ethereum ETF race. The 'ETHness Stakes'
(h/t to @LongTailFinance for the name) pic.twitter.com/ZBQVJ6ppKp
— James Seyffart (@JSeyff) May 20, 2024
The change in Fidelity‘s filing reflects a change in the regulatory climate around Ether ETFs, as the SEC has reportedly asked ETF issuers to update their filings.
This move suggests a possible reconsideration by the regulator on the viability and classification of these financial products.
However, even with this change, one key concern remains: the classification of staked Ether as a security.
The SEC has previously raised concerns about how staking cryptocurrencies, such as Ether, could fall under the definition of a security under the “Howey test.”
This regulatory uncertainty remains a major obstacle to the approval and launch of Ether ETFs.
Despite these challenges, the financial industry continues to bet on the possibility of Ether ETFs coming to market.
Analysts such as Bloomberg’s Eric Balchunas have increased the approval odds for certain Ether ETF applications, indicating growing optimism around the future availability of these products.
Future Outlook and Remaining Challenges at Fidelity
As ETF issuers continue to navigate the regulatory process, they are likely to face new challenges and requirements.
Uncertainty surrounding the classification of staked Ether as a security remains a central issue that will require greater clarity from the SEC.
Additionally, competition among the various participants in the Ethereum ETF race will likely intensify the pressure to obtain regulatory approval.
Those who manage to overcome these obstacles could open new opportunities for institutional and retail investors interested in accessing the cryptocurrency market in a more traditional and regulated way.
The future of Ether ETFs will depend on both regulatory developments and the ability of issuers to address regulator and market concerns.
However, as demand for exposure to digital assets continues to grow, the industry is likely to continue to push for the availability of these innovative financial products.
