Fidelity to Introduce Staking and Quarterly Distributions for $900 Million Ether ETF

Fidelity is planning to upgrade its Fidelity Ethereum Fund (FETH), which currently oversees assets worth $898 million, by introducing staking and quarterly cash distributions.

The fund intends to keep 85% of the gross staking rewards, while the remaining 15% will be shared among service providers. Although FETH could potentially stake almost all of its ether, Fidelity has not specified a minimum staking threshold in its updated registration statement. A portion of ETH will be reserved for redemptions, expenses, and liquidity needs.

This move comes after the IRS introduced a safe harbor in November 2025, allowing certain crypto trusts to stake assets without losing their grantor-trust tax status. Fidelity is following in the footsteps of Grayscale and 21Shares by integrating staking into their ether offerings, while BlackRock has chosen to pursue a separate staking product.

Of the gross staking rewards, 85% will go to Fidelity, and 15% will be distributed amongst the fund sponsor, custodians, and node operators, including Blockdaemon, Figment, and Galaxy. The net staking rewards will first cover the fund’s operational costs before being allocated for the mandated quarterly cash distributions. Additionally, Fidelity may sell some ETH to ensure sufficient cash for these distributions.