Fidelity Files Ethereum ETF, Follows BlackRock And Hashdex's Steps

Fidelity submits Ethereum ETF. (Photo; Doc. Pexels)

Fidelity, one of the largest financial services companies in the world, has submitted a request to launch exchange-traded funds aka Exchange Traded-Fund (ETF) based on Ethereum (ETH) to US capital market regulators, the US Securities and Exchange Commission (SEC).

Fidelity wants to offer a new investment product called the Fidelity Ethereum Fund, which will allow US investors to gain exposure to the price of ETH, the second largest crypto asset after Bitcoin (BTC).

According to documents submitted to the SEC, the Fidelity Ethereum Fund will become a trust whose assets consist of ETH which is stored by certain custodial wallets. This trust will not store cash or other assets other than ETH. Each trust stake will represent part of the trust's net asset.

Fidelity says that the purpose of this trust is to provide US investors with easy and regular access to ETH, without having to face the risks and complexity associated with holding digital assets directly.

The trust is also designed to protect investors from the risk of fraud and bankruptcy that may occur on a centralized platform that stores digital assets.

Fidelity isn't the only company to apply for Ethereum ETF to the SEC. Previously, BlackRock, the world's largest asset manager, and Hashdex, a Brazilian company focused on crypto assets, had also filed a similar application.

Ethereum ETF is an investment product that mimics ETH prices and is traded on stock exchanges like common shares. Ethereum's ETF is expected to increase ETH adoption and liquidity, as well as attract institutional and retail investors into the crypto asset space.

However, the SEC has not yet given approval for Ethereum ETF or other crypto ETFs. US regulators are still skeptical and concerned about the volatility, manipulation and security of the crypto market. The SEC has rejected or delayed many previous crypto ETF applications, including Bitcoin ETFs.