Cboe files proposal to add staking to Fidelity Ethereum ETF

The Chicago Board Options Exchange (Cboe) has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) seeking approval to incorporate staking into the Fidelity Ethereum ETF (FETH).

Filed on March 11, the proposed rule change aims to allow the fund to stake its Ether (CRYPTO:ETH) holdings, potentially increasing returns for investors.

Staking involves locking up cryptocurrency, in this case, Ether, to support blockchain operations such as transaction validation.

Participants in Ethereum’s proof-of-stake system earn rewards in the form of additional tokens.

According to the filing, any staking rewards generated by the fund would be treated as income.

The process would be facilitated through trusted staking providers.

If approved, Fidelity’s Ethereum ETF could become one of the first U.S.-based ETFs to integrate staking.

Cboe highlighted that this feature would enable investors to benefit from staking rewards without dealing with the technical complexities of managing blockchain operations.

“This initiative reflects a growing trend of blending traditional financial products with decentralised finance mechanisms,” Cboe stated.

The move follows a similar proposal by Cboe in February to add staking features to another Ethereum-focused ETF, the 21Shares Core Ethereum ETF.

Other firms, including Grayscale and BlackRock, are also exploring staking options for their crypto ETFs.

The SEC’s decision on this proposal remains pending.

The regulatory body has recently acknowledged multiple filings related to cryptocurrency ETFs, signaling a possible shift in its stance toward digital asset investment vehicles

However, initial approvals for spot Ethereum ETFs last year excluded staking features, likely to ease regulatory acceptance.

Currently, Fidelity’s Ethereum Fund manages nearly $1 billion in assets but has faced challenges due to declining Ether prices.

Industry analysts believe that incorporating staking could enhance its appeal by offering additional yield opportunities.

This development underscores the increasing integration of blockchain-based mechanisms into traditional financial markets.

If approved, it could set a precedent for other ETFs and further expand investor participation in cryptocurrency-backed funds.

At the time of reporting, the Ethereum (ETH) price was $1,863.66.