Fidelity is squaring off against the SEC in a high-stakes battle over Ethereum staking rewards. On March 11, 2025, Cboe BZX Exchange filed paperwork seeking permission for Fidelity‘s billion-dollar Ethereum Fund (FETH) to stake its ETH holdings. No big deal, right? Wrong. This is huge for crypto investors.
The SEC has been a real party pooper about ETF staking. When spot Ethereum ETFs launched in July 2024, regulators forced issuers to strip all staking language from their filings. Heaven forbid investors earn an extra 3.3% on their crypto. But times are changing. The new administration that took office in January 2025 seems less allergic to innovation.
Fidelity isn’t alone in this fight. Grayscale and 21Shares have also filed for staking approval. It’s becoming a crowded battlefield, with BlackRock’s ETHA fund currently leading the pack in assets. If approved, staking rewards would be classified as income for investors according to the proposal. Meanwhile, the whole crypto ETF space keeps expanding – Franklin Templeton even wants an XRP ETF now. Good luck with that one.
The benefits of staking are pretty obvious. ETF investors could earn passive income while fund managers improve their tracking of Ethereum’s performance. It’s a win-win, except for the SEC’s nagging concerns about securities laws. The Howey Test strikes again. Unlike traditional banking, DeFi staking operates through smart contracts that automate the entire process without intermediaries.
Market reaction has been predictably volatile. Ethereum jumped to $1,960 after the staking news broke, while ETH futures saw over $131 million in liquidations within 24 hours. Talk about a rollercoaster. This represents Fidelity’s second attempt at securing staking approval for its Ethereum product.
The clock is ticking. Regulators must respond to the amendment within 45 days, though they’ve already pushed several crypto ETF decisions to May 2025. If approved, Fidelity’s move could open the floodgates for similar products.
American investors are watching enviously as Canadians and Europeans already enjoy staked crypto ETFs. The irony isn’t lost on anyone. For now, U.S. crypto enthusiasts will have to wait while Fidelity and the SEC duke it out. Typical.
