Fidelity is seeking to add staking to its spot Ether exchange-traded fund, a move that would let the product generate yield while keeping its existing fund structure. In an amended registration statement, the asset manager said the Fidelity Ethereum Fund, trading under the ticker FETH and holding net assets of $898 million, could stake as much as 100% of its Ether in normal market conditions. The filing does not set a minimum staking allocation, saying some Ether may remain unstaked to meet redemptions, cover fund expenses, and preserve liquidity.
The change follows U.S. Internal Revenue Service safe harbor tax guidance issued in November 2025. That guidance allows eligible crypto trusts to stake assets without losing grantor-trust treatment, which can help avoid double taxation. Fidelity is joining Grayscale and 21Shares in pursuing staking features for Ether ETF products, while BlackRock has taken a different route by launching a separate staked Ether ETF.
Fidelity said 85% of staking rewards would remain with the fund, while the other 15% would go to the sponsor, custodian, and node operators, which include Blockdaemon, Figment, and Galaxy. Net staking income would first be used to pay ordinary fund operating expenses, with any remainder distributed as quarterly cash dividends. The filing also says the fund may sell part of its Ether holdings when needed to raise cash for those payouts.
Fidelity is preparing to add staking to its spot Ether ETF and pair that feature with quarterly cash distributions.
According to an amended registration statement, the Fidelity Ethereum Fund, listed under the ticker FETH and showing net assets of $898 million, would be allowed to stake up to 100% of its Ether during normal market conditions.
The filing does not set a minimum staking ratio. Fidelity said the fund would keep a portion of its Ether unstaked to handle investor redemptions, pay fund expenses, and maintain the liquidity it needs.
IRS guidance opened the door
The shift follows safe harbor tax guidance issued by the U.S. Internal Revenue Service in November 2025. Under that framework, eligible crypto trusts can stake assets without losing grantor-trust treatment, a structure that can avoid double taxation.
Fidelity is now following Grayscale and 21Shares in moving to add staking to Ether ETF products. BlackRock has taken a different approach by choosing to launch a separate staked Ether ETF.
How staking rewards would be split
On distributions, Fidelity said 85% of staking rewards would remain with the fund. The other 15% would be paid to the fund sponsor, the custodian, and node operators.
The node operators named in the filing are Blockdaemon, Figment, and Galaxy.
Quarterly payouts after expenses
Fidelity said net income generated from staking would first go toward the fund’s day-to-day operating expenses. Any amount left over would then be converted into quarterly cash dividends.
Under IRS rules cited in the filing, funds of this type must distribute staking income at least once each quarter. Fidelity also said the fund may sell part of its Ether holdings when necessary to raise cash for those distributions.
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