Fidelity Investments has filed an SEC amendment to add ether staking and quarterly cash payouts to its $898 million Fidelity Ethereum Fund (FETH). Enabled by a November 2025 IRS safe harbor ruling, the fund plans to stake up to 100% of its assets. Fidelity will retain 85% of the staking rewards, distributing the rest to service providers like Blockdaemon and Figment. The move follows similar staking integrations by competitors Grayscale and BlackRock.
Fidelity Ethereum ETF staking proposal
▪The Fidelity Ethereum Fund (FETH) could stake up to 100% of its ether holdings under normal conditions, with no minimum requirement set.
▪Fidelity Investments filed a pre-effective amendment with the SEC on August 11, 2026, to add ether staking to its spot Fidelity Ethereum Fund (FETH).
IRS safe harbor ruling
▪IRS rules require that qualifying crypto trusts distribute net staking rewards to investors at least quarterly.
▪An IRS safe harbor bulletin issued in November 2025 allows qualifying crypto trusts to stake assets without losing their grantor-trust tax status.
Staking mechanics
▪Fidelity Investments plans to route its staked ether through custodians Anchorage Digital, BitGo, and Fidelity Digital Assets to designated node operators.
▪Fidelity Investments warned that staked ether carries slashing risks and potential liquidity lockups during unstaking, which may require extending redemption timelines.
▪Fidelity Investments named Blockdaemon, Figment, and Galaxy as the designated node operators for the Fidelity Ethereum Fund (FETH) staking program.
Reward distribution structure
▪Fidelity Investments plans to distribute net staking rewards as quarterly cash distributions, though the payouts are not guaranteed and can be suspended at its discretion.
▪The Fidelity Ethereum Fund (FETH) will retain 85% of gross staking rewards, with the remaining 15% allocated to node operators, custodians, and the fund sponsor.
Competitive ETF issuer landscape
▪Grayscale became the first U.S. spot crypto ETF issuer to enable and pay ether staking rewards to holders in October 2025.
▪Bitwise withdrew its proposal to add staking to its Ethereum ETF in September 2025.
▪BlackRock launched a separate staking product, the iShares Staked Ethereum Trust ETF (ETHB), in February 2026.
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