Fidelity’s Proposal for a Spot Ethereum ETF
Fidelity has submitted a 19b-4 to the SEC proposing to launch a spot ethereum exchange-traded fund (ETF) on the Cboe BZX Exchange. The ETF would be designed to track the Fidelity Ethereum Index and hold physical ethereum (ETH) tokens.
Fidelity’s Attempt to Create Regulatory-Approved Exposure to Ethereum
The Fidelity Ethereum Fund is intended to provide U.S. investors with a regulated spot ETF for exposure to the second-largest cryptocurrency by market cap. According to Fidelity’s 19b-4 filing, current options for U.S. investors’ ethereum exposure come with high fees and volatile premiums or discounts due to over-the-counter (OTC) ether funds.
Fidelity argues that the approval of a spot ETF would enhance investor protection in the crypto space and reduce risks associated with existing ether funds, echoing similar rationale put forth by Blackrock in their ETH ETF submission.
Potential Pricing Mechanism for Fidelity’s Proposed ETF
The proposed ETF would utilize a pricing mechanism similar to CME Ether futures and rely on price feeds from major spot exchanges. Fidelity believes this mechanism should meet the SEC’s standard, citing recent court decisions related to spot bitcoin ETFs. Additionally, the ETF would hold ether in cold storage to eliminate counterparty risks.
Fidelity’s Plan to Introduce a Spot Ether ETF
Fidelity has aligned with other prominent financial firms in an effort to introduce a spot ether ETF. The company has filed a 19b-4 for record-keeping purposes and is expected to follow up with an S-1 form to register the product with the SEC, following a similar approach taken by Blackrock.
Hot Take: Fidelity’s ETH ETF Filing Signals Growing Interest in Crypto ETFs
Fidelity’s filing for a spot ethereum ETF demonstrates a continued trend of major financial institutions seeking to provide investors with regulated exposure to cryptocurrencies. As the crypto market gains momentum, the submission of proposals for ETFs tracking digital assets like ethereum indicates a burgeoning interest in integrating crypto into traditional investment portfolios while prioritizing investor protection and regulatory compliance.
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