Fidelity, Ark ETF Plans Drop Staking Amid SEC Pressure; Crypto Industry Reacts
Summary:
Leading Ether exchange-traded funds (ETFs) proponents, such as Fidelity Investments and Ark Investments Management, have removed staking from their propositions due to regulatory pressures from the U.S. Securities and Exchange Commission (SEC). This move, while potentially improving Ether ETF approval chances, has sparked industry debate and worried investors who prioritize staking. Experts warn of broader implications for supply, network security, and decentralization. These changes precede imminent communications between the SEC and potential issuers of spot Ether ETFs, just as the U.S. House of Representatives approves the FIT21 crypto bill.
In the face of United States Securities and Exchange Commission (SEC) regulatory pressures, leading proponents of potential Ether exchange-traded funds (ETFs), such as Fidelity Investments and Ark Investments Management, have decided to eliminate staking from their propositions. This strategic alteration aimed at improving the prospects of Ether (ETH) ETF approval has sparked discussion and concern in the cryptocurrency sector, considering the vital role of staking. Staking, which involves committing cryptocurrencies for transaction validation to earn rewards, is a crucial consideration for many investors. Without staking, Ether ETFs might lose their attractiveness when compared to straight Ether acquisition for staking in pursuit of yields. GSR's senior strategist, Brian Rudick, highlighted the "immediate opportunity cost" of owning Ether through an Ether ETF devoid of staking.
Given that staking underpins the proof-of-stake (PoS) mechanism, its removal from Ether ETFs could have wider repercussions on supply, network security, and diminished decentralization due to reduced staked ETH. A community member of X offered an opinion attributing the removal of staking from Ether ETFs to Ether's lower price compared to Bitcoin (BTC), impacting institutional investment decisions. They equated staking to "acquiring interest on savings" which comes under the "securities umbrella." Thus, they suggested no staking was planned for the Ether ETF from inception, indicating these companies have been subtly acquiring cryptocurrencies during the Bitcoin boom.
Mixed reactions trail these alterations to Ether ETF staking opportunities within the community as the SEC begins discussions with prospective issuers of spot Ether ETFs on May 22. A conclusive decision is expected in the next few hours, following closely after the FIT21 crypto bill's approval in the U.S House of Representatives with 208 Republicans and 71 Democrats approving the bill, while 136 opposed it.
Published At
5/23/2024 4:33:16 PM
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