Fidelity Files 19b-4 for Spot Ethereum ETF, Aims to Increase Investor Protection in the Crypto Space.
The Fidelity Ethereum Fund aims to launch as a US-regulated spot ETF for the second-largest cryptocurrency by market capitalization. Fidelity's 19b-4 filing said currently, options for U.S. investors' ethereum exposure are limited to over-the-counter (OTC) ether funds that incur high fees and volatile premiums or discounts.
Fidelity argues that the approval of a spot ETF would represent a major win for investor protection in the crypto space by reducing the risks associated with existing ether funds. Account 19b-4 bears similarities to Blackrock's recent filing for a spot ether ETF, for similar reasons.
“Approval of the spot ETH ETP would represent a major win for US investor protection in the crypto asset space,” the filing said. “The Trust, like all other Commodity Based Trust Shares suites, is designed to protect investors from the risk of loss through fraud and bankruptcy arising from holding digital assets, including ETH, on a centralized platform.”
The proposed ETF's pricing mechanism will be similar to the CME Ether futures contract and utilize price input from major spot exchanges. Fidelity argues that this must meet SEC standards requiring oversight sharing agreements with regulated markets of significant size. The filing cites a recent court decision that determined the CME futures market meets these standards for a spot bitcoin ETF.
“Both the Exchange and CME are members of ISG. The only issue remaining to be addressed is whether the ETH Futures market is a market of the significant size that the Exchange and Sponsor believe it to be,” the filing said.
