Regulators Stall as Investors Flood Staking-Enabled Ethereum ETFs

The U.S. Securities and Exchange Commission (SEC) has delayed its decision on Fidelity’s physically-backed Ethereum exchange-traded fund (ETF) that includes staking features. The agency has now set a new review deadline of November 13, 2025, according to internal regulatory timelines reviewed by Bloomberg. This extension follows a series of requests from industry participants seeking clarity on the treatment of staking activities within the framework of ETF structures. The staking mechanism allows ETFs to earn yield by locking Ethereum (ETH) in proof-of-stake protocols, a practice that has been a subject of regulatory debate due to concerns about custody and risk management.

Fidelity’s Ethereum ETF continues to attract significant inflows, with data from Farside Investors showing a record net inflow of $65.8 million on September 4, 2025. The ETF has become one of the most liquid vehicles for institutional investors seeking exposure to Ethereum, with daily trading volumes reflecting heightened demand. Analysts note that such inflows can act as a leading indicator for Ethereum price movements, particularly in the context of broader macroeconomic conditions. The fund’s performance underscores the increasing institutional interest in Ethereum, especially as it undergoes network upgrades such as the upcoming Prague-Electra hard fork, which aims to improve scalability and reduce gas fees.

The inclusion of staking in the Fidelity ETF has been a point of contention among regulators and market participants. While some argue that staking enhances the fund’s yield potential and aligns with Ethereum’s transition from proof-of-work to proof-of-stake, others remain concerned about the implications for investor protection. The SEC has not yet provided a formal ruling on whether staking-based ETFs should be treated as traditional investment products or fall under a different regulatory framework. This uncertainty has prompted several ETF issuers to file parallel applications with staking and non-staking structures to test the boundaries of regulatory acceptance.

In parallel to the regulatory review, Ethereum’s market fundamentals have shown signs of resilience. On-chain data from September 4, 2025, indicates a daily transaction volume in the ETH/USDT pair exceeding 500,000 ETH, while the Ethereum fear and greed index registered a score of 60, suggesting cautious optimism among traders. The Ethereum network also recorded approximately 500,000 daily active addresses, reflecting strong ecosystem activity. These metrics highlight the continued relevance of Ethereum as a leading digital asset and reinforce its position as a key component in diversified investment portfolios.

Market observers anticipate that the SEC’s final decision on the Fidelity ETF will have broader implications for the U.S. crypto market. A favorable ruling could pave the way for additional staking-enabled ETFs and further institutional adoption of Ethereum. Conversely, a rejection or restrictive interpretation may delay broader acceptance of crypto assets within traditional financial infrastructure. Traders and investors are closely monitoring the timeline and any accompanying regulatory guidance, as these developments could influence both short-term price action and long-term market sentiment.