Fidelity has filed an amended S-1 application with the United States Securities and Exchange Commission (SEC) for its spot Ether exchange-traded fund (ETF).

The asset management titan has reportedly submitted an updated S-1 application, clarifying that the ETF’s underlying Ether (ETH) tokens will not be staked. S-1 filings are the SEC’s requisite registration form for initiating publicly traded securities products in the United States.

This amended filing comes on the heels of reports that the United States SEC has reversed its stance on spot Ether ETFs — possibly influenced by political pressure — with reports indicating that the regulator has asked ETF issuers to revise their 19b-4 filings.

The upcoming SEC deadline is May 23 for VanEck’s Ether ETF proposal. Although senior Bloomberg ETF analyst Eric Balchunas has raised the approval odds to 75% from 25%, this applies solely to the 19b-4 form.

However, Ether ETF issuers will also need their S-1 filings to gain approval, as noted by Bloomberg ETF analyst James Seyffart, who mentioned in a May 20 X post:

“We also need S-1 approvals. It could be weeks to months before we see S-1 approvals and thus a live ETH ETF… That said, if we’re correct and we see these theoretical approvals later this week, it should mean that S-1 approvals are a matter of ‘When’ not ‘If’…”

Staked Ether Could Be Classified as a Security Despite ETH ETF Approval

The SEC has previously attempted to classify Ether as a security, and Ethereum’s transition to proof-of-stake (PoS) may have provided the regulator with additional justification.

During a 2022 Senate Banking Committee hearing, SEC Chair Gary Gensler reportedly stated that cryptocurrencies and intermediaries facilitating the “staking” of crypto might classify them as a security under the Howey test, according to The Wall Street Journal.

Even with the reversal on Ether ETFs, the securities regulator might still classify staked Ether as a security, as per Alex Thorn, head of research at Galaxy Research. Thorn wrote:

If the speculation about a 180 from the SEC on the Ethereum ETFs is accurate, I would guess they try to navigate a fine line between ‘ETH’ not being a security and ‘staked ETH’ (or even more tenuously, ‘staking as a service ETH’) as being a security.

Fidelity first filed the S-1 application with the SEC on March 27. The initial filing indicated that Fidelity intended to stake a portion of the fund’s ETH holdings.

The original application highlighted that staking introduces additional risks, such as potential loss of funds through “slashing penalties” and liquidity risks during the staking process.

Staking rewards would also be considered income for the fund for tax purposes, resulting in investors facing a taxable event “without an associated distribution from the Trust.”