Fidelity Wants Traders to Stake Assets in Proposed Ethereum ETF
Asset management firm Fidelity has included a request in its amendment for a spot Ethereum exchange-traded fund (ETF) to allow traders to stake their assets. The amendment was filed with the United States Securities and Exchange Commission (SEC) on March 18. Fidelity plans to stake a portion of the ETF’s assets to generate additional income for users. This move highlights the growing popularity of staking in the crypto industry.
What is Staking?
Staking refers to the active participation of crypto users in the operations of a proof-of-stake blockchain. It involves locking up their assets for a certain period to help validate transactions. Staking has become a popular way for crypto holders to earn passive income and participate in network governance.
Fidelity’s Proposal
In its amendment, Fidelity stated that it may stake a portion of the Fund’s assets through trusted staking providers, including its affiliate. By engaging in staking activities, the Fund would receive network rewards in ether tokens as compensation for services provided.
Ethereum Staking Providers
The Ethereum network has several staking providers that offer staking services to users. Some popular providers include:
- StakeWise
- Lido DAO
- RocketPool
- Binance
- Coinbase
- Kraken
Market Reaction to Fidelity’s Proposal
The news of Fidelity’s intention to stake assets in its proposed Ethereum ETF had an impact on Lido DAO’s native token, LDO. According to CoinGecko, LDO briefly spiked 6% before returning to its previous price. At the time of writing, LDO was trading at a 14% decrease in the past 24 hours.
Low Chance of Ethereum ETF Approval
Despite the anticipation for spot Ethereum ETFs, analysts believe that the chances of approval by the SEC are low. Several factors contribute to this skepticism:
- Political backlash against SEC chair Gary Gensler following the launch of spot Bitcoin ETFs in January
- The May 23 deadline for approval
Due to these factors, analysts have revised their approval odds from around 70% to 50%-35%. The crypto community will have to wait and see if the SEC gives the green light to Ethereum ETFs.
Other ETF Applicants Staking Assets
Fidelity is not alone in its plan to stake a portion of its ether assets. Other applicants for spot Ethereum ETFs, such as Ark Invest/21Shares and Franklin Templeton, have also indicated their intention to engage in staking activities.
Fidelity’s Success with FBTC
Fidelity already has a successful spot Bitcoin ETF called FBTC. It is currently the second-largest spot Bitcoin ETF, following BlackRock’s IBIT. With over $7 billion worth of Bitcoin under management, Fidelity’s experience in managing crypto assets positions it well for future ventures.
Hot Take: Staking Continues to Gain Traction in Crypto
The inclusion of staking as part of Fidelity’s proposed Ethereum ETF highlights the growing popularity and importance of staking in the crypto industry. As more users seek ways to earn passive income and actively participate in blockchain networks, staking provides an attractive solution. Whether or not Ethereum ETFs receive approval from the SEC, staking is here to stay as a key aspect of the crypto ecosystem.
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