Fidelity is planning to make its U.S. spot ether ETF yield-bearing. The Fidelity Ethereum Fund (FETH) would add staking and quarterly cash distributions under an amended registration statement, CoinDesk reported on Aug. 12. The fund has around $898 million in net assets. Under normal conditions it could stake up to 100% of the ETH it holds, while still holding back some assets to cover redemptions and liquidity. Staking rewards would be split: the fund keeps about 85%, and the rest, roughly 15%, goes to the sponsor, custodian, and node operators Blockdaemon, Figment and Galaxy as service fees. Net staking proceeds are first used to pay fund expenses; the remaining amount is distributed to holders as cash dividends at least quarterly, following the U.S. Internal Revenue Service safe harbor rules. If cash is short, Fidelity may sell part of its ETH to fund the payments. The revised registration statement sets out the proposed structure.
Fidelity is adding staking and quarterly dividends to its U.S. spot Ethereum ETF, the Fidelity Ethereum Fund (FETH). CoinDesk reported the plan on Aug. 12.
Allocation of staking rewards
The fund has roughly $898 million in net assets. Under normal conditions, it can stake up to 100% of the ETH it holds, while keeping some assets for redemption and liquidity needs. Under the amended registration statement, the fund retains about 85% of total staking rewards. The other 15% is paid as service fees to the fund sponsor, the custodian, and node operators Blockdaemon, Figment and Galaxy.
Quarterly distributions
Net staking income is first used to pay fund expenses. The remaining amount is paid to holders as cash dividends at least once per quarter, in line with the U.S. Internal Revenue Service (IRS) safe harbor rules. If needed, the fund can sell some ETH to raise cash for those dividend payments.
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