EthereumAug 12, 2026

Fidelity’s $898M Ether ETF to Stake 100% of Holdings, Keep 85% of Rewards

Fidelity plans to stake up to all of FETH's ETH and pay quarterly cash distributions, following BlackRock, Grayscale and 21Shares moves.

Marcus Hale

Markets Editor. Marcus covers macro, ETFs and the

2 min read

Fidelity’s $898M Ether ETF to Stake 100% of Holdings, Keep 85% of Rewards

Fidelity is moving to turn its $898 million Fidelity Ethereum Fund (FETH) into a yield-generating product, filing an amended registration statement that would let the ETF stake up to 100% of its ETH holdings and pay out net rewards to shareholders every quarter in cash.

Under the plan, Fidelity would keep 85% of gross staking rewards inside the fund, with the remaining 15% split among the sponsor, custodians and node operators. The filing names Blockdaemon, Figment and Galaxy as the trust’s staking node operators.

How the payout mechanics work

Fidelity set no minimum staking requirement, but the fund will hold back some ETH to cover redemptions, expenses and other liquidity needs rather than staking every coin at once. Net staking rewards will first be used to cover the fund’s operating expenses, with any surplus distributed to holders on a quarterly cash basis — a cadence required under IRS rules for crypto trusts that stake.

If staking income alone isn’t enough to fund a distribution, Fidelity said the ETF may sell a portion of its ETH holdings to raise the cash. That detail matters for holders: it means quarterly payouts are not guaranteed to come purely from staking yield and could, in some periods, dilute the fund’s underlying ETH position.

Regulatory shift opened the door

The move follows an IRS safe-harbor bulletin issued in November 2025 that allows qualifying crypto trusts to stake their holdings without forfeiting grantor-trust tax status. That change has already prompted Grayscale and 21Shares to add staking to their existing spot ether funds, putting Fidelity in the same camp rather than launching a separate product.

BlackRock took a different path, debuting a standalone staking ether ETF, ETHB, in March. That fund opened with roughly $100 million in assets and more than $15 million in first-day trading volume; it has since grown to about $577 million in net assets, making it the fifth-largest ether ETF, according to SoSoValue. BlackRock’s flagship ether fund remains far larger, with $5.6 billion in net assets, while Fidelity’s FETH ranks fourth in the category.

Why it matters for ETH ETF holders

Adding staking to spot ether ETFs converts previously idle assets into yield-bearing positions, narrowing a competitive gap that had pushed some institutional investors toward direct staking or staking-enabled products elsewhere. For FETH holders, the change could translate into periodic cash income on top of price exposure to ETH — though the exact yield will depend on network staking rewards, the 15% fee taken by service providers, and fund expenses deducted before distribution.

Fidelity has been expanding its Ethereum-linked footprint beyond FETH. Earlier this year the firm tapped the Ethereum network to launch its own dollar-pegged stablecoin, Fidelity Digital Dollar (FIDD), backed 1:1 by reserves.