Ethereum ETF applicants drop staking language in ‘temporary offer’ to SEC: Analyst

As the Securities and Exchange Commission (SEC) considers applications for spot Ethereum ETFs—with analysts expecting approval as soon as this week—amended filings from several asset managers dropped their language into staking.

Staking refers to the process by which users contribute Ethereum tokens to the network in exchange for rewards. In 2022, it became a key component of Ethereum’s security model for the network’s long-planned proof-of-stake consensus model.

Fidelity dropped language related to holding client funds in its proposed ETF, submitted Amended filing On Tuesday. The move mirrored a similar move by Arc Invest/21 Shares. its useThe SEC is expected to decide this week.

“Spot Ethereum ETF filers bent the knee by removing staking language to satisfy the recently downtrodden SEC,” said Mark Connors, head of research at 3iQ. Encryption. “We view the removal of the stalking language as a temporary concession.”

If spot Ethereum ETFs receive a regulatory green light, it will mean that a significant portion of Ethereum’s supply is sitting idle in any approved fund. As of this writing, about 27% of Ethereum’s supply, or 32 million ETH-stakes, is held, according to one dune. Dashboard.

While the SEC appears to be approving spot Ethereum ETFs, staking has emerged as a controversial aspect of Ethereum over the past two years as the regulator meaningfully engages with asset managers. In cases, there is a controller will be said Ethereum staking services offer securities on behalf of many companies.

SEC Chairman Gary Gensler spoke specifically about stacking services within an agency Video A year ago, investors argued that when shares were put up by crypto companies, they deserved some disclosure about how the funds were being pooled.

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In other regions, such as Canada, funds holding staked Ethereum have shown they can do just that. Two in 3iQ Exchange-traded productFor example, in 2023 Ethereum started offering customers the benefits of staking.

Conners said the SEC’s change in stance must be due to the political pressure the agency is facing over SAB 121, the crypto-custody provision passed by lawmakers. Voted last week to destroy

“The SEC’s regulation is clearly under attack through enforcement,” he said.

Edited by Andrew Hayward

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