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Fidelity Files Application for Spot Ethereum ETF with Staking

ByLouis Adams

Mar 28, 2024 #Ether
Reading time: < 1 minute

Fidelity has filed an S-1 application with the United States Securities and Exchange Commission (SEC) on March 27, seeking to establish a spot Ether exchange-traded fund (ETF). As outlined in a prior filing, the ETF would allow Fidelity the flexibility to stake a portion of the ETH it holds.

The proposed ETF from the asset management giant would be listed on the Cboe BZX Exchange, with Fidelity Digital Asset Services acting as the custodian for the trust’s ETH holdings. According to the S-1 filing, the Trust intends to implement a staking program through various staking infrastructure providers.

However, the decision to engage in staking activities comes with added risks, as highlighted in the application. These risks include the potential for loss, including “slashing” penalties, as well as liquidity risks during the staking process.

Additionally, staking rewards would be considered taxable income for the fund, resulting in a taxable event for investors without corresponding distributions from the Trust.

The application does not specify the anticipated fees associated with the ETF. In the event of a blockchain fork, the custodian would determine the chain that the fund will support.