Fidelity has filed an amended S-1 application with the U.S. Securities and Exchange Commission (SEC) for its cash exchange-traded fund (ETF).
The asset management giant has reportedly filed an updated S-1 filing, indicating that the Ethereum (ETH) tokens underlying the ETF will not be staked. S-1 filings are the registration form required by the Securities and Exchange Commission to launch publicly traded securities products in the United States.
The revised filing follows reports that the SEC modified Ethereum ETFs – possibly due to political pressure – with reports that it required ETF issuers to update their 19b-4 filings.
The next SEC deadline is May 23 for VanEck’s Ether ETF proposal. Although Bloomberg ETF senior analyst Eric Balchunas increased the chances of approval from 25% to 75%, this only applies to Form 19b-4.
However, ETF issuers will also need to get approval for their S-1 filings, according to Bloomberg ETF analyst James Seyphart, who wrote in a May 20 article:
“We also need S-1 approvals. It could take weeks, if not months, before we see S-1 approvals and therefore the direct EtH ETF… however, if we are correct, we will see these theoretical approvals later this week. This *must* mean that S-1 approvals are a matter of “when” not “if”…”
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Ethereum May Be Classified as a Security Despite ETH ETF Approval
The SEC has previously sought to classify Ethereum as a security, and Ethereum’s upgrade to Proof of Stake (PoS) may have given the regulator another reason.
At a 2022 Senate Banking Committee hearing, SEC Chairman Gary Gensler reportedly said that cryptocurrencies and brokers that allow holders to “stake” their cryptocurrencies may define them as securities according to the Howey test, according to the Wall Street Journal.
Despite the complete change in Ethereum ETFs, the securities watchdog can still classify staked Ethereum as securities, according to Alex Thorne, head of research at Galaxy Research. Thorne wrote:
“If the speculation about the SEC’s 180 on ETH ETFs is true, I think they are trying to make the connection between “ETH” which is not a security and “ETH” (or even worse, “staking”). as a service ETH” ).” ) as a guarantee.”
Fidelity first filed an S-1 with the SEC on March 27. The initial filing indicated that Fidelity aimed to acquire a portion of the fund’s ETH supply.
The initial request stated that staking introduced additional risks, such as potential loss of funds due to “penalty reduction” and liquidity risk when processing stakes.
Stake rewards will also be treated as income to the trust for tax purposes, so investors will face a “no associated distribution from the trust” taxable event.
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