The asset manager Fidelity has filed a 19b-4 with the Securities and Exchange Commission (SEC) to list a spot ethereum exchange-traded fund (ETF) on the Cboe BZX Exchange. The proposed ETF would hold physical ethereum (ETH) tokens and seek to track the Fidelity Ethereum Index, providing exposure to ether’s daily price movements.
Fidelity’s Latest 19b-4 Filing Highlights Spot Ethereum ETF
The Fidelity Ethereum Fund aims to launch as a U.S.-regulated spot ETF for the second-largest cryptocurrency by market capitalization. Fidelity’s 19b-4 filing says currently, the options for U.S. investors’ ethereum exposure are limited to over-the-counter (OTC) ether funds carrying high fees and volatile premiums or discounts.
Fidelity contends approval of a spot ETF would represent a major win for investor protection in the crypto space by reducing risks associated with existing ether funds. The 19b-4 account bears resemblance to Blackrock’s latest submission for a spot ether ETF, echoing comparable rationale.
“Approval of a spot ETH ETP would represent a major win for the protection of U.S. investors in the crypto asset space,” the filing states. “The Trust, like all other series of Commodity-Based Trust Shares, is designed to protect investors against the risk of losses through fraud and insolvency that arise by holding digital assets, including ETH, on centralized platforms.”
The proposed ETF’s pricing mechanism would be similar to CME Ether futures and utilize price feeds from major spot exchanges. Fidelity argues this should satisfy the SEC’s standard requiring surveillance-sharing agreements with a regulated market of significant size. The filing cites recent court decisions stipulating the CME futures market meets this standard for spot bitcoin ETFs.
“Both the Exchange and CME are members of ISG. The only remaining issue to be addressed is whether the ETH Futures market constitutes a market of significant size, which both the Exchange and the Sponsor believe that it does,” the filing states.
Fidelity’s proposed spot ethereum ETF would directly hold ether in cold storage to eliminate counterparty risks, value shares daily based on a spot price index, and let authorized participants exchange ether for share creations/redemptions. When shares are created or redeemed, the fund would exchange ether directly with authorized participants in blocks called “Creation Baskets.”
In tandem with Blackrock, Fidelity aligns with Ark Invest, 21shares, and Vaneck in its endeavor to introduce a spot ether ETF. Similar to Blackrock, Fidelity has simply filed a 19b-4 for record keeping purposes and will likely follow up with an S-1 form to register their product with the SEC.
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