Fidelity Optimistic About Approval of Ethereum Spot ETF Application
Fidelity, a leading financial management firm, has recently made amendments to its application for an Ethereum spot exchange-traded fund (ETF). The company is confident about receiving approval from the United States Securities and Exchange Commission (SEC) and has taken steps to enhance its chances.
Nate Geraci, Chairman and President of The ETF Store, shared this update with the crypto community on social media. He mentioned that the amendment includes a more comprehensive examination of the connection between the spot and futures markets. Fidelity entered the race to introduce an Ethereum ETF in November 2021, joining other applicants such as Grayscale, Ark Invest, 21Shares, and BlackRock.
The updated filing by Fidelity references the acceptance of a spot Bitcoin ETF. Geraci shared a screenshot of the filingโs crucial page, emphasizing that Ethereum ETF issuers will hold the SEC accountable. Fidelity argues that since there is a strong correlation between Ethereum and Bitcoin futures offered by the Chicago Mercantile Exchange (CME), applying the same grounds used for approving a spot Bitcoin product satisfies the test for an Ethereum ETF.
In addition to updating its application, Fidelity plans to allow traders and users in its proposed Ethereum fund to stake a portion of the assets. The Registration Statement states that Fidelity may occasionally stake a portion of the Fundโs assets through reputable staking providers, some of whom may be affiliated with Fidelity. The Fund would receive specific network rewards in Ether tokens for any staking activity it performs, which would be considered income for the Fund.
Grayscale Makes Updates to ETH ETF Proposal
Following in Fidelityโs footsteps, Grayscale has also amended its proposal for an Ethereum spot ETF. This move is a significant step towards uplisting its ETHE product to NYSE Arca. Grayscale believes that, like spot Bitcoin ETFs, there is a strong case for spot ETH ETFs, as investors demand and deserve exposure to Ethereum in this aspect.
NYSE Arca intends to list and trade the shares of the proposed Ethereum ETF in compliance with the guidelines mentioned in the Securities Exchange Act of 1934. This includes Section 19(b) and Rule 19b-4.
The Current State of Ethereum Spot ETF Approvals
While Fidelity and Grayscale remain optimistic about the approval of their Ethereum spot ETF applications, the overall landscape for these products seems uncertain. Hereโs a summary of the current state of Ethereum spot ETF approvals:
1. Rejections:
- The SEC has rejected multiple proposals for Bitcoin spot ETFs over concerns about market manipulation and lack of investor protection.
- A similar fate may await Ethereum spot ETFs, as they face similar regulatory challenges and scrutiny from the SEC.
2. Delays:
- The SEC has delayed its decision on several Bitcoin spot ETF proposals, including those from VanEck and ProShares.
- This delay indicates that the SEC is taking its time to carefully evaluate these products and address any concerns before making a final decision.
3. Canadian Success:
- In contrast to the situation in the United States, Canada has approved several Ethereum spot ETFs, allowing investors to gain exposure to Ethereum through regulated investment vehicles.
- This success in Canada may serve as an example for US regulators and encourage them to consider approving similar products.
4. Potential Catalysts:
- Several factors could act as catalysts for the approval of Ethereum spot ETFs in the United States:
- The launch of spot Bitcoin ETFs in the US, if successful, could pave the way for other cryptocurrency ETFs, including Ethereum.
- Increased institutional adoption and interest in Ethereum, as evidenced by Fidelity and Grayscaleโs applications.
- The growing acceptance and recognition of cryptocurrencies by traditional financial institutions and regulators.
Hot Take: Will Ethereum Spot ETFs Get Approved?
The fate of Ethereum spot ETFs remains uncertain, but there is a wave of optimism among financial management firms applying for these products. Here are some key takeaways:
1. Regulatory Hurdles:
The SEC has raised concerns about market manipulation and investor protection in the context of Bitcoin spot ETFs. It is likely that similar concerns will apply to Ethereum spot ETFs, making the approval process challenging.
2. Precedent from Canada:
The success of Ethereum spot ETFs in Canada provides hope for their approval in the United States. Regulators may look to Canada as an example and consider approving similar products.
3. Institutional Interest:
The involvement of prominent financial management firms like Fidelity and Grayscale indicates increasing institutional interest in Ethereum. This could influence regulatorsโ decisions and increase the chances of approval.
While the road to approval may be uncertain, it is clear that there is significant demand for Ethereum spot ETFs. Investors are eager to gain exposure to Ethereum through regulated investment vehicles, and financial management firms are actively pursuing this opportunity.
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