Key facts
- Fidelity plans to add ether staking and quarterly cash distributions to its Fidelity Ethereum Fund (FETH).
- The fund currently holds $898 million in net assets.
- Fidelity will retain 85% of gross staking rewards, with 15% allocated to service providers.
- The move is influenced by a November 2025 IRS safe harbor bulletin regarding crypto staking.
- Net staking rewards will be used to cover fund expenses and then distributed quarterly.
Fidelity is preparing to introduce ether staking and quarterly cash distributions to its Fidelity Ethereum Fund (FETH), a significant spot ether exchange-traded fund in the U.S. with $898 million in net assets. Under normal conditions, the fund could stake up to 100% of its ether holdings, though it will maintain some ETH for liquidity needs, redemptions, and expenses.
This strategic move by Fidelity follows similar initiatives from competitors like Grayscale and 21Shares, and is facilitated by an IRS safe harbor bulletin issued in November 2025. This bulletin allows qualifying crypto trusts to stake assets without jeopardizing their grantor-trust tax status. BlackRock has adopted a different approach by launching a separate staking product.
According to the amended registration statement, Fidelity will retain 85% of the gross staking rewards generated by the fund. The remaining 15% will be allocated to service providers, including node operators such as Blockdaemon, Figment, and Galaxy. The net staking rewards will first be utilized to cover the fund's operational expenses. Subsequently, any remaining net rewards will be distributed to investors on a quarterly basis, as mandated by IRS rules. Fidelity also noted that the fund may sell some ETH to generate cash for these payouts.