American asset management giant Fidelity Investments has submitted a new amendment to its spot Ethereum ETF, adding a component to participate in equity investment.
Amid intense competition for spot Ethereum ETFs, Fidelity joins the group of applicants looking to invest their fund assets in equity investments. The company submitted the amendment in a Form 19b-4 filing, joining other potential issuers that have already filed related documents, such as Grayscale Investments.
The Fidelity Ethereum Fund will trade as “BZX Rule Commodity-Based Trust Shares” after obtaining approval from the U.S. Securities and Exchange Commission (SEC).
The need for Ethereum staking
Since Ethereum transitioned to Proof of Stake (PoS) via The Merge, staking is now a standard means for investors to earn passive income while serving as validators. Fidelity Investments’ efforts to launch a spot Ethereum ETF will primarily invest in the cryptocurrency.
The latest filing seeks to allow investments to be extended to “a pool of one or more trusted Stake Providers, which may include affiliates of the Sponsor (‘Stake Providers’)”.
Ethereum staking is currently a very promising area, with leading protocol Lido reaching $32.24 billion in total locked value (TVL), according to DeFiLlama. Fidelity could potentially earn an additional 3.4% APY through equity investing, for example if it partnered with Lido. This reward will be paid out in Ether.
“As consideration for any equity investment activities the Fund may engage in, the Fund will receive certain ether network rewards, which may be considered income for compensation for services provided by the Fund,” Fidelity’s filing reads.
Chances of Spot Ethereum ETF Approval
As VanEck’s May 23 filing deadline approaches, attention is growing on whether the U.S. Securities and Exchange Commission (SEC) will give the green light for the product to trade, as it did for Bitcoin in January.
Although market experts have mixed opinions, many are placing their confidence on previous comments from SEC Commissioner Hester Peirce. According to her, the market regulator will not repeat the mistakes it made before the Bitcoin ETF approval.
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