Fidelity Files Amended S-1 Application with SEC for Spot Ether ETF, Removes Staking

Asset manager Fidelity has made an amended S-1 application to the United States Securities and Exchange Commission (SEC) for its spot Ether exchange-traded fund (ETF).

The updated application specifies that the underlying Ether tokens of the ETF will not be staked, according to recent reports. 

S-1 filings are mandatory registration forms required by the SEC for launching publicly traded securities products in the United States.

SEC Might Greenlight Ether ETFs

This filing comes in the wake of reports suggesting that the SEC has reversed its stance on spot Ether ETFs, potentially influenced by political pressures. 

As a result, the commission has reportedly requested ETF issuers to revise their 19b-4 filings. 

The upcoming deadline for the SEC’s decision falls on May 23, specifically for VanEck’s Ether ETF proposal.

While senior Bloomberg ETF analyst Eric Balchunas has increased the likelihood of approval to 75%, up from the previous estimation of 25%, this specifically applies to the 19b-4 form.

However, approval for Ether ETF issuers also necessitates the acceptance of their S-1 filings, as highlighted by Bloomberg ETF analyst James Seyffart in a recent post.

Seyffart indicates that the approval process for S-1 filings could take weeks to months, even if the theoretical approvals for 19b-4 filings occur this week. Despite the potential delay, Seyffart suggests that S-1 approvals are a matter of “When” rather than “If.”

A quick note, @EricBalchunas and increased odds to 75% for spot #Ethereum ETF approvals. But that's for the 19b-4 May 23rd deadline (@vaneck_us's deadline) We also need S-1 approvals. It could be weeks to months before we see S-1 approvals and thus a live Eth ETF h/t @NateGeraci

— James Seyffart (@JSeyff) May 20, 2024

The SEC faces final deadlines to make decisions on VanEck and ARK‘s spot Ethereum ETF applications on May 23 and May 24, respectively.

Liquidity Concerns Remain

In a recent note, Matteo Greco, a research analyst at digital asset investment firm Fineqia International, added that concerns over the liquidity of ETH’s spot and futures markets, along with its previous classification as a security by the SEC, contribute to skepticism about swift approval.

“If rejected, issuers would need to resubmit filings, potentially leading to approval in Q4 2024 or Q1 2025 at best,” the analyst wrote.

Greco added that another possible scenario involves the approval of the 19b-4 filings while “slow-playing” the S-1s. The SEC must approve both the 19b-4s and the S-1s for the launch of Spot ETH ETFs.

The 19b-4s filing allows national security exchanges like the New York Stock Exchange (NYSE) or Nasdaq to list new products, such as Spot ETH ETFs. The S-1s are the initial registration forms required for new securities offered to the public.

Notably, fund companies engaged in active dialogue with the SEC and submitted multiple amended versions of paperwork to address the SEC’s concerns prior to the greenlighting of Bitcoin ETFs.

However, there has been significantly less activity in this regard for spot Ethereum ETF filings. This lack of public activity has led many to anticipate a disapproval order.

“Most people are universally expecting a disapproval order,” Katherine Dowling, general counsel for Bitwise, which filed for a spot-Ether ETF in March, told Bloomberg.

“You’re not seeing the types of public activities that you would see if there was going to be an approval.”