Financial giant Fidelity Investments is seeking regulatory approval for an exchange-traded fund (ETF) centered on Ethereum, as disclosed in a recent filing with the Securities and Exchange Commission (SEC). This move closely follows BlackRock’s submission of its own application for an Ethereum ETF. The proposed Fidelity Ethereum Fund aims to mirror the price movements of Ethereum, the native cryptocurrency of the Ethereum blockchain. If approved, the ETF’s shares would be traded on the Cboe BZX Exchange under the ticker symbol ETHF.
Fidelity submits its Ethereum ETF filing to the SEC
Fidelity outlines the fund’s objective, stating it aims “to seek to track the performance of Ether, as measured by the performance of the Fidelity Ethereum Index.” This index reflects the U.S. dollar price of ether based on trading activity across major platforms dealing with the cryptocurrency. Fidelity’s filing positions it as the seventh entity pursuing a spot Ethereum ETF, following filings from notable players like BlackRock, Grayscale, 21Shares/ARK, VanEck, and Hashdex. BlackRock, managing assets exceeding $9.4 trillion, is particularly significant in terms of scale and expertise.
The filing arrives amid heightened expectations for the SEC to greenlight a spot bitcoin ETF, following its approval of futures-based bitcoin ETFs in the previous year. Advocates for cryptocurrencies argue that a spot ETF would offer a safer avenue for mainstream investors to participate in the digital asset space. In response to the SEC’s announcement of a delay in deciding on spot Bitcoin ETFs from Franklin Templeton and Global X, Fidelity’s Ethereum ETF proposal comes into focus. The SEC had recently deferred Hashdex’s application as well.
Regulatory hurdles and market dynamics
Fidelity emphasizes the lack of a U.S. regulated, exchange-traded vehicle for Ethereum exposure available to U.S. retail investors. This contrasts with investors in other countries who can access more traditional exchange-listed and traded products. The path to approval for an Ethereum ETF is likely to encounter regulatory challenges akin to previous attempts at Bitcoin ETFs. The SEC typically demands surveillance-sharing agreements between an ETF’s listing exchange and the underlying spot market for the asset. The maturity of the ether futures market, launched in 2021, remains uncertain in meeting these regulatory standards.
With over $11 trillion in customer assets under management, Fidelity has been expanding its presence in the cryptocurrency sector. The firm initiated institutional cryptocurrency trading and custody services back in 2018. This move into the ETF space aligns with similar efforts from rival asset managers such as Invesco and Galaxy Digital, both of which have filed for cryptocurrency ETFs earlier this year. Fidelity’s pursuit of an Ethereum ETF underscores the growing interest and competition in the cryptocurrency ETF landscape.
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