Key Takeaways
- • Fidelity filed with the SEC on August 11, 2026, to add Ethereum staking functionality to its Fidelity Ethereum Fund (FETH), a $898 million spot ETF, enabling the fund to generate yield from its existing Ether holdings rather than keeping assets idle.
- • FETH could stake up to 100% of its Ether holdings under normal market conditions, retaining only the minimum necessary for redemptions, expenses, and liquidity management.
- • The fund structure allocates 85% of gross staking rewards to FETH shareholders, with the remaining 15% distributed as fees among the sponsor, custodians, and node operators, with payouts planned quarterly (non-guaranteed).
- • Fidelity designated Blockdaemon, Figment, and Galaxy Digital Trading Cayman as node operators for the staking program, positioning these firms as critical infrastructure partners in the initiative.
- • The filing brings Fidelity into direct competition with BlackRock and Grayscale, which already operate staking-enabled Ether ETFs, while Bitwise withdrew a similar proposal in September 2025.
Summary
Fidelity Investments submitted an amended registration statement to the Securities and Exchange Commission on August 11, 2026, requesting authorization to integrate Ethereum staking into its Fidelity Ethereum Fund (FETH). The $898 million spot ETF would transition from a purely passive price-tracking vehicle to an active yield-generating fund by staking its Ether holdings on the Ethereum proof-of-stake network. This modification represents a strategic shift to enhance fund revenue potential and shareholder returns in an increasingly competitive staking-enabled ETF landscape.
Under the proposed structure, FETH would be permitted to stake up to 100% of its Ether holdings under normal market conditions, maintaining only sufficient reserves to meet shareholder redemptions, cover operating expenses, and ensure adequate liquidity. The fund's investment objective would be adjusted to track the Fidelity Ethereum Reference Rate while incorporating staking income as an additional return component. This dual-return model differentiates FETH from competing products by explicitly integrating both price appreciation and staking yield into shareholder returns.
The fee and revenue-sharing arrangement establishes clear stakeholder incentives: FETH shareholders retain 85% of gross staking rewards, while the remaining 15% is distributed among the fund sponsor, custodians, and node operators as compensation for infrastructure and operational services. Fidelity plans to distribute staking rewards to shareholders on a quarterly basis, though such payouts carry no guarantee. Fidelity selected Blockdaemon, Figment, and Galaxy Digital Trading Cayman as the fund's node operators, establishing a diversified infrastructure partnership to validate transactions and secure the staking program.
The filing positions Fidelity competitively within an evolving segment: BlackRock and Grayscale currently operate staking-enabled Ether ETFs, while Bitwise withdrew an analogous proposal in September 2025. Fidelity's approach of maximizing staking participation while maintaining operational flexibility reflects institutional-grade risk management and addresses regulatory requirements for securities-based crypto products. The timing and terms of SEC approval remain uncertain, but the filing signals Fidelity's commitment to capturing incremental revenue streams within its substantial Ethereum fund franchise.
Under the proposed structure, FETH would be permitted to stake up to 100% of its Ether holdings under normal market conditions, maintaining only sufficient reserves to meet shareholder redemptions, cover operating expenses, and ensure adequate liquidity. The fund's investment objective would be adjusted to track the Fidelity Ethereum Reference Rate while incorporating staking income as an additional return component. This dual-return model differentiates FETH from competing products by explicitly integrating both price appreciation and staking yield into shareholder returns.
The fee and revenue-sharing arrangement establishes clear stakeholder incentives: FETH shareholders retain 85% of gross staking rewards, while the remaining 15% is distributed among the fund sponsor, custodians, and node operators as compensation for infrastructure and operational services. Fidelity plans to distribute staking rewards to shareholders on a quarterly basis, though such payouts carry no guarantee. Fidelity selected Blockdaemon, Figment, and Galaxy Digital Trading Cayman as the fund's node operators, establishing a diversified infrastructure partnership to validate transactions and secure the staking program.
The filing positions Fidelity competitively within an evolving segment: BlackRock and Grayscale currently operate staking-enabled Ether ETFs, while Bitwise withdrew an analogous proposal in September 2025. Fidelity's approach of maximizing staking participation while maintaining operational flexibility reflects institutional-grade risk management and addresses regulatory requirements for securities-based crypto products. The timing and terms of SEC approval remain uncertain, but the filing signals Fidelity's commitment to capturing incremental revenue streams within its substantial Ethereum fund franchise.
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