BOSTON — Fidelity filed a pre-effective amendment with the Securities and Exchange Commission on Aug. 11, seeking to add quarterly staking payments to its Fidelity Ethereum Fund (FETH).
The fund holds $898 million in net assets, making it one of the largest spot Ethereum ETFs in the United States. The proposal would allow FETH to stake up to 100 percent of its Ethereum holdings, distributing rewards to investors as quarterly cash payouts.
Staking involves locking digital assets on a blockchain to support network security and transaction verification. Participants earn rewards, typically in the form of additional digital assets or cash — a structure analysts compare to interest accrued in a traditional bank account.
Grayscale and 21Shares previously added staking to their Ethereum funds. Fidelity's filing follows that model: staking rewards would first cover fund expenses, with any remainder distributed to FETH investors each quarter. The fund also retains the option to sell a portion of its Ethereum holdings to generate cash for distributions.
Fidelity has not specified the exact percentage of holdings it will stake at any given time. The fund will maintain a portion of its Ethereum for redemptions, operational expenses and liquidity requirements, meaning the total amount staked will fluctuate with market conditions and fund flows.
The actual yield investors receive will depend on Ethereum's network staking reward rate, the amount of ETH staked and the fund's expense ratio. Fidelity has not disclosed projected payout amounts.
The regulatory pathway for spot Ethereum ETFs in the United States opened with their approval in May 2024, following the January 2024 approval of spot Bitcoin ETFs, which have since attracted significant capital, including $754 million in recent inflows across the sector.
The SEC's review of the pre-effective amendment will determine when FETH can implement staking and cash distributions.
