Securities and Exchange Commission (SEC) has made it clear that issuers wishing to launch ETFs for spot ether will not stake ETH in the funds.
Staking ether involves depositing ETH to help secure the Ethereum blockchain — and earning yield in exchange.
Tuesday filings by Cboe — the exchange that seeks to list spot ether ETFs by Fidelity, Franklin Templeton, Ark Invest, Invesco and VanEck — indicate that this possibility would be off the table for such funds, if approved.
“Neither the trust, nor the sponsor, nor the custodian, nor any other person associated with the trust will, directly or indirectly, engage in action where any portion of the trust’s ETH becomes subject to the Ethereum proof-of-stake validation or is used to earn additional ETH or generate income or other earnings,” It is stated in the documents.
Nasdaq also used almost identical language when filing for iShares Ethereum Trust on May 21, 2011. NYSE Arca did the same on behalf Grayscale, for both its Ethereum Mini Trust (and for Bitwise Ethereum ETF) and also for Grayscale’s Ethereum Mini Trust.
The amendments to the so-called 19b-4s — documents filed by stock exchanges, in this case, detailing a proposed rule change — come just ahead of the SEC’s May 23 deadline to rule on an ether ETF proposal by VanEck.
As it did for spot bitcoin ETFs the regulator is expected to make a decision on all ether ETF proposals 19b-4 at one time. The regulator would have to make a decision on the registration statements or S-1s submitted by fund issuers. This could happen later, as segment observers point out.
“Still a potentially long way from a launch,” In a post on Tuesday X, James Seyffart, a Bloomberg Intelligence Analyst said. “But these filings prove that all of the rumors and speculation and chatter have been accurate.”
Seyffart refers to an increased optimism in the recent days regarding the approval of spot ether ETFs after the engagement between SEC, the stock exchanges and ETF issues seemed to have accelerated.
Several fund groups had in recent months noted their intent to stake a portion of the ether trusts’ assets via staking providers — a feature industry watchers noted the SEC was likely not ready to allow.
Ark Invest CEO Cathie Wood said, in a February interview with Blockworks founder Jason Yanowitz: “I believe the staking/securing language is not accurate.” “a sticking point” SEC.
Ark Invest & 21Shares, who had previously sought to use ETH as a stake for the planned fund, removed such language in its amended S-1 filing on May 10.
The SEC has not made clear its stance on whether ether is a commodity, like bitcoin, or a security — a question that continues to weigh on the possibility of spot ether ETF approval.
Alex Thorn is the head of Galaxy Digital’s research. He said that in a post on Monday X, “the SEC may try to” “thread a needle” Labeling “staked ETH” While ether is not a secure, it can be used as a means of securing data.
Thorn added “That would be somewhat congruent with their various court cases, as well as with reports about their various investigations, and perhaps allow SEC to approve ethereum ETFs while maintaining their previously stated/arguing opinions.”
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