- Fidelity Investments has taken additional steps with its application for an Ethereum (ETH) spot exchange-traded fund (ETF).
- This development comes as both Fidelity and other applicants await approval from the Securities and Exchange Commission (SEC) to begin ETH ETF trading in the U.S.
- Fidelity’s recent amendments include significant financial and operational updates related to their proposed ETF.
Fidelity strengthens its Ethereum ETF application with financial updates, illuminating the ongoing race for SEC approval.
Fidelity Revises S-1 Form – Key Changes Unveiled
On June 21, Fidelity made substantial revisions to its Form S-1 Registration Statement filed with the SEC, a critical document for launching the Ether exchange-traded fund publicly.
The updated filing disclosed that FMR Capital, a Fidelity affiliate, acquired 125,000 shares priced at approximately $38 each, seeding the ETF with around $4.7 million. This move enabled the Trust to purchase 1,250 Ether tokens through the Seed Baskets.
Operational Decisions – Avoidance of Staking
One of the pivotal updates in Fidelity’s filing is the decision to abstain from participating in Ethereum staking. This was initially suggested in late May and now firmly stated in the amended S-1. The document specified:
“The Trust will not participate in the proof-of-stake validation mechanism of the Ethereum network (i.e., the Trust will not ‘stake’ its ether) to earn additional ether or seek other means of generating income from its ether holdings.”
This choice sets Fidelity apart from potential competitors and highlights its strategic approach to managing its ETF.
No Fee Disclosure Yet – Industry Speculations
Interestingly, Fidelity’s amended filing has not yet addressed the fee structure for the proposed ETF. This omission has sparked speculation within the industry. Bloomberg’s ETF analyst, Eric Balchunas, suggests that it’s possible ETF issuers are strategically waiting, potentially for a lead from BlackRock, before revealing their fee schedules.
BlackRock, another major player in the ETF space, has similarly updated its S-1 form. They reported a seed capital of about $10 million but also withheld fee information from its filing.
Industry Analysts Predict Launch Timelines
Eric Balchunas from Bloomberg remains confident in his forecast that Ethereum spot ETFs will commence trading by July 2, 2024. He noted that the current amendments to S-1 forms are a pivotal step before final SEC approval. He stated:
“Next step: we will see a bunch of amended S-1s filed today, prob later this afternoon. Then ball’s in SEC’s court to let issuers know about any final changes and effectiveness (aka final approval). We holding the line with July 2nd as our over/under for eth ETFs launch date.”
The SEC’s decisions in the upcoming weeks will be critical to the timeline and strategy for these Ethereum ETFs.
Conclusion
Fidelity’s latest amendments to their Ethereum ETF registration signal both strategic financial maneuvers and calculated operational decisions. As the SEC’s review process progresses, industry watchers keenly anticipate the final verdict, which could significantly impact the crypto ETF landscape. For now, the expected launch date remains set for early July, keeping all eyes on the SEC.
