Fidelity Moves to Add Staking, Quarterly Payouts to its Ethereum ETF FETH 

Fidelity Investments is seeking to add staking to its $898 million Fidelity Ethereum Fund (FETH), potentially allowing the fund to stake as much as 100% of its Ethereum holdings and distribute staking-related proceeds to investors.

The asset manager filed an amended registration statement with the U.S. Securities and Exchange Commission (SEC) on Aug. 11 proposing to add staking and quarterly cash distributions to FETH. 

The proposal is not yet effective, and Fidelity cannot begin staking through the fund unless the SEC declares the amended registration statement effective.

Under the proposed structure, FETH could stake up to 100% of its ETH under normal market conditions. The fund would not be required to stake a minimum amount and could retain some ETH to meet redemption requests, cover expenses and maintain liquidity.

Of the gross staking rewards generated by the fund, 85% would go to FETH. The remaining 15% would be allocated among the fund's sponsor, custodians and node operators.

Fidelity has identified Blockdaemon, Figment and Galaxy Digital Trading Cayman as the intended node operators that will run the validator infrastructure.

The 85% allocated to the fund would not be paid directly to shareholders. The proceeds would first be used to cover the fund's operating expenses, with any remaining amount distributed to investors in cash on a quarterly basis, subject to the applicable tax treatment for the fund's grantor-trust structure.

The distributions would not be guaranteed. If the fund does not have sufficient cash to make a distribution, it could sell ETH to raise the necessary funds.

Fidelity has entered into new custody arrangements with Anchorage Digital Bank and BitGo Bank & Trust for the fund's staked assets.

The custodians would hold the private keys associated with the assets, while the designated node operators would handle validator operations. The arrangement separates custody of the assets from the operation of the validators.

Fidelity's ability to begin staking would remain subject to the SEC declaring the amended registration statement effective.

Fidelity's proposal comes as U.S. asset managers increasingly look to staking as a way to add potential income to Ethereum investment products.

Grayscale began staking through its Grayscale Ethereum Staking ETF (ETHE) in October 2025 and began distributing staking proceeds to shareholders in January 2026. 21Shares also began distributing staking rewards from its Ethereum ETF products that month.

BlackRock took a different approach. Rather than adding staking to its existing spot Ethereum ETF, the asset manager launched the iShares Staked Ethereum Trust ETF (ETHB) in March 2026 as a separate product.

Adding staking to an established spot ETF like FETH could reshape competition among Ethereum ETF issuers by turning a price-tracking product into a yield-generating one. The move also signals growing regulatory comfort with staking inside existing grantor trust structures.

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