Summary
Fidelity is preparing to add staking and quarterly cash payouts to its Fidelity Ethereum Fund (FETH), one of the largest spot ether ETFs in the U.S. FETH, with $898 million in net assets, could stake as much as 100% of its ether under normal conditions, though Fidelity set no minimum, according to an amended registration statement. The fund would keep some ETH available for redemptions, expenses and other liquidity needs.
Key Facts
- Fidelity plans to add ether staking and cash distributions to FETH ($898 million in net assets)
- Fund could stake as much as 100% of its ether under normal conditions; no minimum set
- Fidelity would retain 85% of gross staking rewards; 15% goes to fund sponsor, custodians, node operators
- Blockdaemon, Figment and Galaxy named as the trust's node operators
- Net staking rewards first cover fund expenses, then used for quarterly cash distributions
- Funds must distribute net staking rewards at least quarterly per IRS rules
- Fund may sell some ETH to raise cash for payouts
- Follows IRS safe harbor bulletin (Nov 2025) letting qualifying crypto trusts stake without losing grantor-trust tax status
- Fidelity joins Grayscale and 21Shares in adding staking to existing ether funds
- BlackRock took a different route by introducing a separate staking product
Why It Matters
Fidelity's move to add staking to its ether ETF reflects the maturation of the crypto ETF market, as issuers seek to generate yield on the underlying assets and pass returns to investors. The IRS safe harbor bulletin that enables staking without losing grantor-trust tax status has opened the door for this evolution. By retaining 85% of gross staking rewards and distributing net rewards quarterly, Fidelity is creating a yield-generating product that could attract investors seeking income from their crypto exposure. The move follows similar initiatives from Grayscale and 21Shares, while BlackRock's separate staking product highlights divergent strategies among issuers. For the fintech sector, this signals that staking is becoming a standard feature of ether ETFs, reshaping the economics of digital asset investment products.