Fidelity Seeks SEC Permission for Staking in Its ETFs

Fidelity is pursuing SEC approval for staking options in its Ethereum (ETH) ETF product via the CBOE exchange. This follows similar applications by 21Shares and Grayscale, indicating growing optimism for staking in U.S. spot ETH ETFs.

These ETF products, launched last summer, currently hold around $7 billion in total net assets in custody. By staking, a portion of the ETH could be delegated to validators, enhancing blockchain security and generating additional tokens as rewards.

ETH Staking Rewards

Bitwise is also considering a similar application in the U.S., with CEO Matt Hougan emphasizing the advantages of staking ETPs for increased investor returns and improved network security. Additionally, Etherealize founder Vivek Raman noted that the absence of staking has limited ETH ETF adoption, suggesting that staking could cultivate a more appealing narrative for Ethereum.

According to Staking Rewards, staked ETH is yielding approximately 3.7% annually. This could drive demand for ETH ETFs, offering the only current yield for asset managers through the CME Ethereum basis trade, which involves buying a spot ETH ETF while shorting CME Futures to capture the price difference.

Last November, this trading strategy yielded nearly 20%. Including staking rewards could elevate this potential yield to 23%. Despite a current decline in broader sentiment, with the CME basis trade down to about 6%, factoring in staking returns could still present a combined yield of about 9% for ETH ETF investors.

At the time of writing, ETH is priced at $1,880, representing a 54% decrease from its all-time high of $4,000. The effectiveness of ETF staking on the altcoin’s value remains uncertain.