Fidelity to add staking and quarterly payouts to $900 million Ethereum ETF
Fidelity Investments plans to add staking to its Fidelity Ethereum Fund (FETH), which has approximately $898 million in net assets. The company intends to use staking rewards, among other purposes, to fund quarterly cash distributions to investors.
According to an amended registration statement, the fund will be able to stake up to 100% of its ETH under normal market conditions. Fidelity will keep a portion of the assets liquid to meet redemptions, cover expenses and address other liquidity needs.
Fidelity to retain 85% of staking rewards for the fund
The company has not established a minimum share of ETH that must be staked. This will allow the manager to adjust the amount of assets committed to staking depending on the fund's liquidity needs.
FETH will retain 85% of gross staking rewards. The remaining 15% will go to the fund's sponsor, custodians and node operators. The filing names Blockdaemon, Figment and Galaxy among the latter.
Net staking proceeds will first be used to cover fund expenses. Any remaining amount will serve as a source of quarterly cash distributions to shareholders.
If necessary, Fidelity may sell a portion of its ETH to generate cash for these distributions.
The change became possible following a November 2025 decision by the U.S. Internal Revenue Service (IRS). The agency introduced a safe harbor allowing qualifying cryptocurrency trusts to participate in staking without losing their grantor trust tax status.
Fidelity will not be the first major asset manager to add this feature to an existing Ethereum fund. Grayscale and 21Shares previously introduced staking, while BlackRock opted for a different approach and launched a separate ETH staking exchange-traded product in March 2026.
Fidelity expands its crypto presence
The FETH changes come as Fidelity continues to expand its cryptocurrency business. The company has also backed the passage of the CLARITY Act in the U.S. Senate, arguing that the legislation could provide greater certainty for market participants and strengthen investor confidence.
Fidelity believes that establishing a clear regulatory framework for digital assets could also help the U.S. remain competitive in the global cryptocurrency market.
The company is simultaneously expanding its stablecoin infrastructure. Fidelity Investments previously announced the launch of a government money market fund for institutional stablecoin issuers. Its portfolio will consist exclusively of instruments permitted under the U.S. GENIUS Act as reserves backing stablecoins.
Meanwhile, some parts of the broader group are facing pressure from rating agencies. KBRA previously downgraded Fidelity Financial's ratings, citing weaker capital metrics compared with peers.
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