Fidelity Drops Staking from Ethereum ETF Application Amid Regulatory Developments

Fidelity has omitted the staking provision in its updated S-1 form for a spot Ethereum ETF. 

Previous documents indicated the firm’s intention to “lock a portion of the trust’s assets” with “one or more” infrastructure providers. 

However, the new application states that the company “will not engage in Ethereum staking.” ARK Invest and 21Shares have made similar moves. 

Bloomberg analyst Eric Balchunas noted that the situation regarding staking in exchange-traded funds has now been clarified. 

Looks like you got a final answer as to whether SEC will allow staking: No. As this is first amendment of any document to roll in post-SEC 180 and their comments to issuers yesterday. https://t.co/HUUYQHtxsh

— Eric Balchunas (@EricBalchunas) May 21, 2024

“It seems you have received a final answer on whether the SEC will allow staking — no. This is the first amendment to any document following the agency’s 180-degree turn and its comments to issuers,” the expert stated. 

On May 20, media reported that the regulator asked companies to update the 19b-4 form in their instrument launch applications. 

According to sources from The Block, the SEC’s proposed amendments are “relatively minor.” Insiders claim the deadline for document submission ended on May 21 at 10:00 UTC. 

They also indicated that the request for amendments is a positive signal: 

“It would be strange to ask people to update anything and then reject it. Although in this market, literally anything can happen.” 

Meanwhile, Reuters reported that the SEC has asked stock exchanges Nasdaq and CBOE to refine their ETH-ETF listing applications. 

Standard Chartered’s Forecast 

Standard Chartered analysts expect Ethereum ETF approval as soon as this week. May 23 marks the deadline for applications from VanEck and Grayscale.

In a conversation with The Block, the bank’s head of department, Jeff Kendrick, stated he is “80–90% confident” in the instrument’s imminent launch.

“We estimate that after approval, spot ETFs will create demand for 2.39–9.15 million ETH in the first 12 months. In fiat terms, this corresponds to approximately $15-45 billion,” he added. 

If Ethereum funds receive approval this week, the asset could begin a “parallel rise to bitcoin, with the current price ratio of the coins at 5.4% remaining until the end of the year,” Kendrick clarified. 

According to Standard Chartered’s forecast, by December, the first cryptocurrency will reach $150,000, and Ethereum $8,000. By the end of 2025, analysts expect prices of $200,000 and $14,000, respectively. 

At the time of writing, ETH is trading at $3,790, having gained about 24% in a day. 

Back in April, Standard Chartered joined the camp of skeptics doubting the approval of spot ETH-ETFs by May 23. Analysts cited the lack of constructive dialogue between the regulator and issuers.

Following news of the application update request, several industry experts predicted increased Ethereum volatility amid the narrative surrounding exchange-traded funds.