Fidelity, the money management giant, is seeking to enhance its potential Ethereum exchange-traded fund (ETF) by allowing traders to stake some of the fund’s assets. In an amendment submitted to the U.S. Securities and Exchange Commission (SEC), Fidelity expressed its intention to partner with trusted staking providers to enable traders to stake a portion of the fund’s assets. The news caused a positive market response, with the price of Lido, a staking protocol supported on the Ethereum network, rising by 9% before experiencing a slight decline. Fidelity joins other prominent players like BlackRock, Ark Invest, and Grayscale in the race to launch an Ethereum ETF, although experts foresee a low likelihood of SEC approval before the May 23 deadline.

Fidelity Adds Staking to Ether ETF Application

Overview

Fidelity Investments, a renowned money management giant, has recently shown interest in allowing traders of its potential Fidelity Ethereum Fund to stake some of the assets. In an amendment submitted to the U.S. Securities and Exchange Commission (SEC), Fidelity expressed its intention to incorporate staking into its forthcoming Ethereum exchange-traded fund (ETF). This move by Fidelity highlights the growing importance of staking in the cryptocurrency space, particularly within the Ethereum network.

Fidelity’s Potential Ethereum Fund

In November, Fidelity filed an application to launch an Ethereum ETF, joining other potential issuers such as BlackRock, Ark Invest, 21Shares, and Grayscale. An ETF is an investment vehicle that provides investors with exposure to a particular asset, in this case, Ethereum, without requiring them to directly own the underlying asset. ETFs offer benefits such as diversification, liquidity, and ease of trading. Fidelity’s offering will be in direct competition with other issuers in the market, each seeking to gain a share of the growing demand for cryptocurrency investment products.

Staking Assets

Staking is a method that allows network participants to lock up their cryptocurrency holdings as collateral to support the operations of a blockchain network. In return, participants receive rewards in the form of additional cryptocurrency tokens. Fidelity’s plan to allow staking in its Ethereum fund means that investors will have the opportunity to earn rewards by staking a portion of their assets. This move aligns with the increasing trend of investors seeking passive income streams from their crypto investments. To facilitate staking, Fidelity will collaborate with trusted staking providers, including its own affiliate, to ensure the security and reliability of the staking process. This will provide investors with a seamless staking experience and enhance the overall attractiveness of Fidelity’s Ethereum fund.

Impact on Lido

Lido, a staking protocol on the Ethereum network, experienced a significant price increase following Fidelity’s announcement. As a popular choice for Ethereum staking, Lido’s value rose by 9% to $2.64 once the news broke. This surge in price suggests that investors recognize the significance of Fidelity’s entrance into the staking market and anticipate positive future prospects for both Fidelity’s Ethereum fund and the staking industry as a whole. The market reaction to this news indicates growing confidence in the potential profitability and legitimacy of staking as a method of investing in cryptocurrency.

Fidelity’s Competition

Fidelity is not the only company seeking to launch an Ethereum ETF. Several other prominent players in the financial industry, including BlackRock, Ark Invest, and Grayscale, are also actively pursuing the approval of their own Ethereum funds. These companies bring substantial expertise, resources, and reputations to the table, making the competition for SEC approval highly competitive. Each potential issuer has its unique offering and value proposition, and Fidelity will need to differentiate itself to attract investors and gain a competitive edge in the market.

Slim Chance of ETF Approval

The approval of an Ethereum ETF by the SEC remains uncertain, with experts predicting a slim chance of approval before the upcoming May 23 deadline. The SEC has been cautious about approving cryptocurrency-related investment products due to concerns about market manipulation, lack of investor protection, and compliance with regulatory requirements. However, the growing interest in cryptocurrencies, coupled with the increasing institutional demand for investment products, may eventually lead to the approval of an Ethereum ETF. Analysts and industry experts continue to closely monitor developments and provide insights on the likelihood of approval based on various factors and regulatory considerations.

CoinDesk’s Ownership and Independence

CoinDesk, the source of this article, is a well-established media outlet that covers the cryptocurrency industry. It operates under a strict set of editorial policies to ensure journalistic integrity and independence. In November 2023, CoinDesk was acquired by the Bullish group, the owner of Bullish, a regulated digital assets exchange. The Bullish group has a majority ownership stake by Block.one, a company with interests in various blockchain and digital asset businesses. Despite the ownership structure, CoinDesk operates independently as a subsidiary with an editorial committee that safeguards its journalistic independence. This ensures that CoinDesk’s reporting and coverage remain unbiased and objective, providing readers with reliable and accurate information.

About the Author

Helene Braun is a New York-based reporter with expertise in covering Wall Street, spot bitcoin ETFs, and crypto exchanges. She is also the co-host of CoinDesk’s Markets Daily show. Helene holds a degree in business and economic reporting from New York University. Throughout her career, she has appeared on various news platforms, including CBS News, YahooFinance, and Nasdaq TradeTalks. Her qualifications, experience, and deep understanding of the financial market make her a trusted source of information in the crypto industry.