Cboe BZX Exchange has submitted a proposed rule change to the Securities and Exchange Commission (SEC) seeking permission to amend the Fidelity Ethereum Fund (FETH) and wants the agency to allow for the staking of Ether held by the trust according to PANews.
This amendment if approved, will allow the fund to generate additional yield for investors through Ethereum’s native stalking mechanism and this move could also transform the Fidelity Ethereum ETF from a passive holding vehicle into one that actively participates in the Ethereum network’s proof-of-stakes consensus mechanism.
Details of the CBOE Filing
The filing, designated SR-CboeBZX-2025038, exclusively seeks to amend the existing FETH to permit staking of Ether held by the trust which fell under BZX Rule 14.11 (e)(4), Commodity-Based Trust Shares. The filing has been submitted on March 10, 2025 and the document was officially approved by Exchange’s President or designee on the same day it was submitted to the SEC.
Background on the Fidelity Ethereum ETF
The Fidelity Ethereum Fund was officially listed on July 23, 2024, following the SEC’s approval of spot Ethereum ETFs in the United States. The fund’s objective is to track the performance of Ether, as measured by the performance of the Fidelity Ethereum Reference Rate, adjusted for the Trust’s expenses and other liabilities.
Prior to the ETF approval, Fidelity had already shown interest in incorporating staking functionality, having amended its initial ETF application on March 18, 2024, to include this feature.
Regulatory Context and Timing
CBOE’s application timing is noteworthy as it has been brought up at a time when the landscape for cryptocurrency is changing in the US. In July 2024, when the SEC initially authorized spot Ethereum ETFs to trade, it specifically prohibited these funds from staking ETF for yield despite multiple request from issuers including Fidelity, 21Shares, and Franklin Templeton.
However, the regulatory outlook seems to be changing in the US and there are high possibilities that Cboe’s proposal can be approved.
Implications for Institutional Crypto Investment
If the proposal is approved, this would indicate the drastic regulatory shift in the region and would allow traditional investors to not only gain exposure to Ethereum’s price movements but also participate in network rewards through conventional investment vehicle.
The staking feature would also transform these ETFs from passive tracking instruments to products that generate yield, similar to dividend-paying stocks or interest-bearing bonds.
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