Key facts
- Fidelity plans to add ether staking and quarterly cash distributions to its Fidelity Ethereum Fund (FETH).
- The fund could stake up to 100% of its ether holdings, retaining 85% of gross staking rewards.
- Net staking rewards will cover fund expenses before being distributed quarterly to investors.
- The move aligns with a November 2025 IRS safe harbor bulletin on crypto staking.
- FETH currently holds $898 million in net assets and has seen significant inflows since its launch.
Fidelity Investments is preparing to introduce ether staking and quarterly cash distributions to its Fidelity Ethereum Fund (FETH), a spot ether exchange-traded fund with $898 million in net assets. The fund intends to stake up to 100% of its ether holdings under normal conditions, while retaining a portion for liquidity needs, redemptions, and expenses. This move follows similar initiatives from competitors like Grayscale and BlackRock and is supported by a November 2025 IRS safe harbor bulletin that permits qualifying crypto trusts to stake assets without jeopardizing their grantor-trust tax status. Fidelity will retain 85% of gross staking rewards, with 15% allocated to service providers, including node operators. Net staking rewards will first be used to cover the fund's operational expenses, with any remaining amounts distributed to investors quarterly. The fund may also sell ETH to generate cash for these payouts.
When the SEC approved spot Ethereum ETFs in 2024, those products did not allow staking. The fund charges a 0.25% fee. Staked ETH carries slashing risk and can be locked up during unstaking, a liquidity snag the fund plans to manage by extending redemption timelines if needed.