EddieJayonCrypto

 21 May 24

tl;dr

Fidelity Investments has revised its upcoming Ethereum exchange-traded fund (ETF) by removing the staking feature, citing regulatory uncertainties. The ETF will not stake Ethereum or invest in derivatives, offering a simple investment avenue. Shareholders will have minimal management roles and lack ...

Fidelity Investments has revised its upcoming Ethereum exchange-traded fund (ETF) by removing the staking feature, citing regulatory uncertainties. The ETF will not stake Ethereum or invest in derivatives, offering a simple investment avenue.

Shareholders will have minimal management roles and lack voting rights. Ethereum will be stored in segregated accounts, primarily in cold storage for security.

This change aligns with speculation about the SEC's approach to Ethereum ETFs, potentially excluding staking.

Analysts are increasingly optimistic about the approval of spot Ethereum ETFs, with predictions of significant inflows upon approval.

Fidelity Investments has revised its upcoming spot, Ethereum exchange-traded fund (ETF), notably removing the staking feature. This modification, detailed in the latest S-1 filing with the US Securities and Exchange Commission (SEC), reflects a strategic shift in response to regulatory uncertainties.

The filing states that the Trust will neither stake the Ethereum it holds nor invest in derivatives. Designed to provide a simple and efficient avenue for Ethereum investment, the ETF avoids the complexities of direct crypto transactions.

Fidelity clarified that it would not participate in the Ethereum network’s proof-of-stake validation mechanism. Emphasizing the passive investment strategy, the Trust declared that shareholders will play a minimal role in its management. Shareholders will also lack voting rights in most situations.

Regarding asset custody, the Ethereum will be securely stored in segregated accounts. Most of these assets will be in cold storage to maximize security, with a minor portion in hot storage to facilitate operational efficiency.

This is a pivot from Fidelity’s S-1 filing in March 2024. Back then, the asset manager planned to include the staking facility in its spot Ethereum ETF. This strategic change coincides with growing speculation about the SEC’s approach to Ethereum ETFs, especially those that include staking.

Amid these regulatory deliberations, optimism is rising regarding the likelihood of spot Ethereum ETF approvals. This is because Bloomberg ETF analysts Eric Balchunas and James Seyffart have increased their approval probability from 25% to 75%.

Moreover, Standard Chartered analyst Geoff Kendrick believes there are 80-90% odds that the SEC will approve Ethereum ETFs this week. He predicts these ETFs will attract inflows worth $15 billion to $45 billion in the first 12 months.

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