Fidelity Amends Ethereum ETF Application to Address SEC Concerns

• Fidelity revised its S-1 application for a Spot Ethereum ETF, opposing the staking of underlying Ether (ETH).
• Analyst Eric Balchunas raised the approval probability to 75%.
• Other applicants, like Ark 21Shares, are also removing staking clauses from their filings.

Fidelity has revised its S-1 application to the SEC for its spot Ethereum ETF proposal. The amended application submitted close to the May 23 deadline opposes the staking of ETF’s underlying Ether (ETH). This move tackles issues surrounding the security and regulations of staking activities.

For clarity, the S-1 filing is a registration requirement by the SEC to launch publicly traded securities in the U.S. The filling ensures that entities maintain transparency and align with federal regulations.

According to reports, Fidelity’s application review and update followed speculations that the SEC might revise its stand on Ethereum ETFs stemming from political pressure. As a result, the regulator has asked the applicant for an amended 19b-4 filing detailing the operations of the proposed ETFs.

Meanwhile, the SEC will decide on VanEck’s Spot Ethereum ETF proposal on May 23. As expected, this will mark another key moment in the ETF approval process. Moreover, market sentiment regarding the approval of these ETFs has taken a positive turn. 

For instance, Eric Balchunas, a senior ETF analyst at Bloomberg, has increased the estimate of the spot ETF approval from 25% to 75% following his initial submission of 35% in March.

Fidelity’s decision to remove the staking feature from its ETF proposal could positively influence the SEC’s decision. Balchunas reiterated this sentiment, stating that the SEC is unlikely to allow staking via Ethereum ETFs. 

“Looks like you got a final answer as to whether SEC will allow staking: No. As this is the first amendment of any document to roll in post-SEC 180 and their comments to issuers yesterday,” he stated .

Fidelity’s latest move aligns with this news update, indicating that other ETF applicants might follow suit. Not long ago, Ark 21Shares also removed the staking clause from its Ether ETF S-1 filing, suggesting a trend toward compliance with SEC guidelines.