Fidelity Files to Let Its Ethereum ETF Stake and Pay Investors
Fidelity has filed with the SEC to add staking to its spot Ethereum ETF, the Fidelity Ethereum Fund (FETH), which could turn it into a yield-bearing product. If approved, the fund’s objective would shift from tracking the Fidelity Ethereum Reference Rate minus fees to aiming for that benchmark plus staking rewards. Fidelity says the fund could stake up to 100% of its ETH, though it is not required to stake any amount. The ETH would be routed through custodians and node operators to validate transactions and earn rewards. Those rewards would be shared among Fidelity, custodians, and node operators, with the fund keeping part of the yield. FETH would make quarterly cash distributions, and Fidelity expects the rewards to be treated as taxable income. Distributions are not guaranteed. The filing also highlights staking risks, including slashing penalties and liquidity delays during unstaking. Fidelity follows Grayscale, which already began paying staking rewards on its ETH ETF, while BlackRock has also sought SEC approval. The amendment becomes effective only if the SEC approves it.
