Fidelity, a $4.9 trillion asset manager, has submitted an amended S-1 registration statement to the United States Securities and Exchange Commission (SEC) for its spot Ether exchange-traded fund (ETF). In the updated filing, Fidelity has removed plans to stake a portion of the fund's assets, likely to improve the chances of SEC approval following a recent change in the regulator's stance.

The new S-1 application submitted on Tuesday by Fidelity explicitly states that the company will "not stake the ether" held by the custodian, removing the clause indicating it would stake Ether through third-party providers. Staking, a process involving locking Ethereum tokens on the network to earn rewards, is a crucial aspect of Ethereum's proof-of-stake model since September 2022 and is considered passive income by cryptocurrency traders.

Previously, Fidelity's filing mentioned that staking rewards would be treated as taxable income, potentially creating taxable events for investors without corresponding distributions from the trust. The decision to remove staking from the ETF plans is likely a response to SEC concerns about staking crypto assets, following the SEC's lawsuit against Coinbase in June 2023 for offering staking services, alleging violations of federal securities laws.

As the spot ETH ETF deadline approaches, optimism is rising with reports suggesting that the SEC has softened its stance on spot Ethereum ETFs, possibly due to political pressure, prompting ETF issuers to update their filings. By eliminating staking plans, Fidelity aims to mitigate regulatory risks and enhance the likelihood of ETF approval. Bloomberg analysts have increased the probability of approval from 25% to 75%, reflecting growing confidence in the ETF's potential success.

The SEC has postponed decisions on various spot Ether ETF proposals, including those from Invesco Galaxy, Grayscale, Franklin Templeton, VanEck, and BlackRock. Deadlines for decisions on VanEck's application by May 23 and Ark and 21Shares's applications by May 24 are looming, adding to the anticipation surrounding the SEC's rulings.

Fidelity's revised filing coincides with a significant price surge for Ether, which has surged over 22% in the past 24 hours to reach a two-month high of $3,818, according to CoinGecko data. With expectations running high as the SEC's decision deadline approaches, the approval and listing of spot Ethereum ETFs could have a substantial impact on Ether's price, potentially propelling it to new all-time highs. Conversely, a rejection by the SEC could trigger a significant price correction in the cryptocurrency market.