TLDR
-
Fidelity plans Ethereum staking and quarterly cash payouts for its FETH fund
-
FETH could stake up to 100% of its Ether under normal operating conditions now
-
Fidelity would retain 85% of staking rewards after its fees paid to providers
-
Quarterly cash payouts would depend on staking income, expenses and liabilities
-
Fidelity joins Grayscale and BlackRock in expanding US Ethereum staking products
Fidelity plans Ethereum staking and quarterly cash payouts for its Fidelity Ethereum Fund, known as FETH. An Aug. 11 SEC filing would let the fund stake most Ether while keeping liquidity for operations. The $898 million fund would keep 85% of staking rewards after service fees.
Ethereum Staking Plan Expands FETH Strategy
Fidelity amended FETH’s registration statement to permit staking of up to 100% of Ether under normal conditions. The fund would reserve ETH for redemptions, expenses, distributions, and liquidity needs. The asset manager plans to start staking soon after the prospectus becomes effective.
The fund would face no minimum staking requirement under the proposed structure. Instead, Fidelity would adjust staking levels according to liquidity needs, network conditions, and redemptions. Custodians would control private keys, while selected operators would manage Ethereum validator infrastructure.
The filing names Blockdaemon, Figment, and Galaxy Digital Trading Cayman as intended node operators. The fund would allocate assets based on security, experience, technology, and concentration limits. This structure would spread operational exposure while allowing FETH to earn Ethereum staking rewards.
Quarterly Cash Payouts Would Use Staking Income
Fidelity plans to allocate 85% of staking rewards to FETH after a 15% service fee. The sponsor, custodians, and node operators would share that fee under the proposed structure. Remaining rewards could support expenses, redemptions, additional staking, and shareholder payments.
FETH would accumulate rewards in Ether before converting available amounts into US dollars. The sponsor would set record and payment dates under applicable exchange rules. Fidelity would not guarantee a distribution during every quarter.
Payment amounts would depend on staking yields, validator performance, network rules, expenses, and liabilities. The fund could retain rewards when its obligations exceed available staking income. This policy would help FETH preserve liquidity before sending cash to shareholders.
Fidelity Follows Broader Shift Toward ETF Staking
Fidelity’s proposal follows earlier staking moves by Grayscale and BlackRock in the US Ethereum market. Grayscale enabled staking in 2025, while BlackRock later launched a separate staking-focused Ethereum product. The amendment would add staking directly to FETH instead of creating another Ether fund.
The proposal also follows federal tax guidance for staking inside qualifying digital asset trusts. The framework allows eligible trusts to earn staking rewards while preserving federal tax treatment. Fidelity said FETH intends to operate its staking program within that safe-harbor structure.
Staking would add liquidity and operational risks because validator exits can take longer during heavy network demand. The fund plans daily liquidity monitoring and would keep assets available for expected redemptions and expenses. It would also manage custody, slashing, validator, and settlement risks through internal controls.
