The Cboe BZX Exchange has filed a request with the U.S. Securities and Exchange Commission (SEC) to allow staking for the Fidelity Ethereum Fund (FETH), as revealed in a March 11 filing.
Staking involves locking ETH to secure the Ethereum network while generating rewards. A staked ETH ETF could offer investors additional income beyond traditional spot Ethereum ETFs if approved.
The filing outlines the advantages of staking, emphasizing that it would enhance investor returns, streamline the fund’s creation and redemption process, and improve overall efficiency.
According to the filing:
“Allowing the Trust to stake its ether would benefit investors and help the Trust to better track the returns associated with holding ether. This would improve the creation and redemption process for both authorized participants and the Trust, increase efficiency, and ultimately benefit the end investors in the Trust.”
The filing also establishes strict staking guidelines that:
- Only the ETH held by the fund will be staked, with no pooling of assets from external entities.
- The sponsor will not advertise staking services, guarantee returns, or solicit staked assets from third parties.
- Staking will serve to protect the fund’s assets, contribute to network security, and generate shareholder returns.
This filing is unsurprising, considering several industry players have pushed for staking integration in ETFs, arguing that it allows investors to benefit from network-native features while strengthening blockchain security.
In a recent submission to the SEC, Solana-focused infrastructure company Jito Labs and Multicoin Capital pointed out how staking in exchange-traded products (ETPs) could provide structural benefits and attract investor interest.
The firms stated:
“Restricting staking in crypto asset ETPs harms (i) investors, by crippling the productivity of the underlying asset and depriving investors of potential returns, and (ii) network security by preventing a significant portion of an asset’s circulating supply from being staked.”
Meanwhile, this proposal comes as Ethereum ETFs face a wave of investor withdrawals. Over the past four days, the funds have recorded outflows exceeding $140 million, reflecting ongoing market challenges.
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