Fidelity files SEC amendment to enable staking rewards distribution on its $898M spot Ethereum ETF, with 85% of staking yields passed to investors quarterly.
Regulation & Gov ·
Fidelity has filed an amended registration statement to add staking capabilities to its Fidelity Ethereum Fund (FETH), which holds approximately $898 million in net assets. Under the proposal, the fund would retain 85% of gross staking rewards, with the remaining 15% directed to service providers including node operators Blockdaemon, Figment, and Galaxy. Net staking rewards, after covering fund expenses, would be distributed to investors via quarterly cash payouts.
The filing follows an IRS safe harbor ruling issued in November 2025 that permits qualifying crypto trusts to stake assets without jeopardizing grantor-trust tax status. Fidelity's approach joins comparable initiatives by Grayscale and 21Shares, which have added staking to existing ether funds, though BlackRock elected to launch a separate staking product. The fund may stake up to 100% of its ether holdings under normal market conditions, though it will maintain some assets for redemptions, expenses, and liquidity needs.
Regulatory approval remains pending. The mechanics of quarterly distribution and the specific timing for implementation have not been disclosed, and whether Fidelity will need to sell ether to fund payouts in periods of lower staking yields remains an open question.