news.bitcoin.com
On March 18, the financial behemoth Fidelity Investments updated its application for a spot ethereum exchange-traded fund (ETF) to encompass staking capabilities. The firm, Fidelity, has made it known that the sponsor might “from time to time” opt to “stake a portion of the fund’s assets through one or more trusted staking providers.”
Fidelity Updates Ethereum ETF Application by Introducing Staking
Fidelity has made an interesting move in regard to its spot ether exchange-traded fund (ETF) application filed with the U.S. Securities and Exchange Commission (SEC). The fund notes in the Form 19b-4 amendment that “the sponsor may, from time to time, stake a portion of the fund’s assets through one or more trusted staking providers, which may include an affiliate of the sponsor.”
Staking ether involves placing a specific quantity of ethereum (ETH), the Ethereum network’s native crypto asset, into the Ethereum 2.0 smart contract to serve as a validator. By verifying transactions and contributing to the creation of new blocks, validators fortify the network’s security. As compensation for their efforts, stakers receive rewards in additional ether. The amendment outlines how the extra ether rewards will be beneficial to the ETF, according to Fidelity’s explanation.
“In consideration for any staking activity in which the fund may engage, the fund would receive certain network rewards of ether tokens, which may be treated as income to the fund as compensation for services provided.”
Engaging in ether staking, whether through the validator method or liquid staking, has gained considerable traction in recent years. Fidelity, by allocating a portion of its ethereum for staking, stands to gain significant revenue, depending on the amount staked. Take Microstrategy as an example; had it opted for ethereum rather than BTC, it would possess 4.79 million ether.
If Microstrategy decided to stake 50% of this hypothetical ether holding, it could see annual earnings of $347 million. With the Fidelity spot BTC ETF reserves valued at slightly above $9 billion, its potential ether ETF might reach a similar magnitude, making the staking of even a small portion of these assets a profitable venture.
What do you think about Fidelity’s amended application? Share your thoughts and opinions about this subject in the comments section below.