Cboe Seeks SEC Approval to Add Staking Feature to Fidelity’s Ethereum ETF

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Cboe Seeks SEC Approval to Add Staking Feature to Fidelity’s Ethereum ETF

  • Cboe seeks SEC approval to add staking to Fidelity’s Ethereum ETF for higher returns.
  • Staking in Ethereum ETFs could boost investor returns by 3.3% annually, pending approval.
  • Cboe pushes for staking in Ethereum ETFs to streamline creation and redemption processes.

Cboe BZX Exchange submitted an application to U.S. Securities and Exchange Commission (SEC) on March 11, 2025 to merge staking capabilities into Fidelity Ethereum Fund (FETH). The filing provides Fidelity Ethereum Fund (FETH) with permission to stake its Ethereum (ETH) holdings so investors can receive rewards by protecting the Ethereum network security.

Shared ownership of ETH becomes achievable through validator locking where users earn returns of 3.3% annually as reported by Staking Rewards platform. The approval of this proposal would advance U.S.-based exchange-traded fund (ETF) features by addressing regulatory restrictions regarding securities.

Details of the Staking Proposal

The Cboe BZX filing specifies that Fidelity’s fund would stake ETH through trusted providers, ensuring compliance with SEC regulations. The proposal highlights benefits like enhanced investor returns and improved efficiency in the fund’s creation and redemption processes. It also clarifies that only the fund’s ETH would participate, avoiding external asset pooling.

This request follows a similar filing in February 2025, when Cboe sought staking approval for the 21Shares Core Ethereum ETF. The SEC has yet to rule on either proposal, but experts note a shifting regulatory tone since President Donald Trump’s second term began in January 2025. The agency’s recent acknowledgment of multiple crypto ETF filings suggests growing openness to such innovations.

Broader Context and Industry Trends

Fidelity’s Ethereum Fund, managing nearly $1 billion in assets per VettaFi data, ranks among the top Ether ETFs. However, Ethereum ETFs have faced challenges, with outflows exceeding $140 million over four days as of March 11, 2025. Adding staking could attract investors by offering additional income amid a market downturn.

The push for staking aligns with broader industry efforts. In February, NYSE filed for staking in Grayscale’s Ethereum ETFs, while firms like Jito Labs and Multicoin Capital argue that staking boosts asset productivity and network security. Cboe has also proposed listing XRP ETFs and supporting in-kind redemptions for Fidelity’s Bitcoin and ETH funds, reflecting a trend toward integrating crypto-native features into traditional finance.

The SEC’s decision, expected later in 2025, could reshape the U.S. crypto ETF landscape. Approval would signal a policy shift, potentially encouraging other asset managers to adopt staking.

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