Fidelity Investments, a leading American asset management firm, has filed an amendment to its application for authorization of an ether (ETH) spot ETF with the United States Securities and Exchange Commission (SEC).
This amendment introduces the possibility of conducting staking with a portion of the ETF's assets through "trusted providers," potentially marking a significant milestone pending approval by the SEC.
Staking involves depositing cryptocurrencies into a smart contract to earn rewards, and Fidelity notes in its proposal that the fund would receive ETH rewards treated as income for participating in staking activities.
Through the Proof of Stake (PoS) mechanism, staking allows users to lock up their coins to validate transactions and receive rewards, offering an additional income source to ETH holders.
Fidelity's involvement in ETH staking, as a prominent asset manager, could significantly impact the Ethereum ecosystem. Additionally, it's noteworthy that this fund is the second-largest bitcoin spot fund, having acquired a substantial amount of BTC totaling 141,448 BTC.
This isn't the first instance of staking being included in an Ethereum ETF application. Other companies such as Ark Invest and Franklin Templeton have also submitted spot ETF applications for ETH, incorporating this practice.
As CriptoNoticias reported, according to investment management firm VanEck, staking could be a crucial factor in Ethereum ETFs outperforming bitcoin ETFs if approved. In contrast, the returns of bitcoin-based ETFs depend solely on the cryptocurrency's price movement.
However, despite the optimistic outlook, there remains a prevailing sense of pessimism regarding the approval of Ethereum ETFs. Experts like Eric Balchunas from Bloomberg Intelligence have voiced skepticism due to political pressures that could sway regulatory decisions.
Eleanor Terrett of Fox Business also noted that the initial optimism surrounding the approval of ether ETFs has waned, reflecting the uncertainty surrounding this regulatory process.
Furthermore, Jake Chervinsky of Variant Fund added that legal and political conditions in Washington DC could make the denial of ether ETFs more likely than the general sentiment suggests.
The inclusion of staking in Ethereum ETF applications signifies a step towards the evolution of cryptocurrency investment strategies, yet regulatory challenges and uncertainties persist, potentially impacting their approval.