Cryptocurrencies

Fidelity has filed an amended S-1 with the Securities and Exchange Commission

Fidelity has filed an amended S-1 application with the U.S. Securities and Exchange Commission (SEC) for its spot exchange-traded fund (ETF).

The asset management giant has reportedly filed an updated S-1 filing, stating that the underlying Ethereum (ETH) tokens for 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 comes on the heels of reports that the SEC has changed Ethereum ETFs – possibly due to political pressure – with reports that it has required ETF issuers to update their 19b-4 filings.

The next SEC deadline is May 23 for VanEck’s Ether ETF proposal. While Bloomberg ETF Senior Analyst Eric Balchunas has increased the odds of approval to 75% from 25%, 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 post:

“We also need S-1 approvals. It could be weeks to months before we see S-1 approvals and thus the direct EtH ETF… however, if we are right we will see these theoretical approvals later this week. It *must* mean that S-1 approvals are a matter of “when” and not “if”…”

Related: Grayscale CEO Michael Sonnenshein is stepping down

Ethereum can be classified as a security despite the approval of the ETH ETF

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.

During 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 under the Howey Test, according to the Wall Street Journal.

Despite the complete shift in Ethereum ETFs, the securities watchdog may 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 would think they are trying to thread a needle between “ETH” that is not a security and “ETH” (or even more lamely, “staking as a service ETH”).” ) as a guarantee.”

Fidelity first filed an S-1 filing with the SEC on March 27. The initial filing stated that Fidelity aims to acquire a portion of the fund’s ETH supply.

The initial application noted that staking introduces additional risks, such as the potential loss of funds through “penalty reduction” and liquidity risk during stake processing.

Staking rewards will also be treated as income to the trust for tax purposes, with the result that investors will face a “no associated distribution from the trust” taxable event.

magazine: Trader turns $3K into $46M in PEPE, Ethereum Gas Fix, Tornado Developer Convicted: Hodler’s Digest, May 12-18

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