Fidelity Adds Staking to Its Ethereum ETF: What It Means for Investors

Fidelity filed an amended registration statement with the SEC that would add staking and quarterly cash distributions to its Ethereum fund, FETH. It is the company's first step toward turning a passive ETF into a product that pays out real income from the Ethereum network. The market reacted almost instantly: the fund's shares rose 2.4% ahead of Wednesday's market open.

What exactly did Fidelity file?

The company submitted an amended registration document for its spot Ethereum fund, the Fidelity Ethereum Fund, known by its ticker FETH, to the Securities and Exchange Commission. At the time of filing, the fund held $898 million in ETH.

Under the new rules, the fund could stake up to 100% of its coins under normal conditions, excluding ETH reserved for share redemptions, operating costs, and liquidity needs. Fidelity set no minimum staked share.

In the filing itself, Fidelity said staking would begin "as soon as practicable" after the prospectus takes effect. The preliminary version of the document could still change before the registration statement officially becomes effective.

FETH launched in July 2024 as one of the first spot ETH ETFs in the US, alongside products from BlackRock, Grayscale, and Bitwise. Since then, the market for these funds has moved from simple price tracking toward finding ways to pay investors extra income.

How would the reward split work?

The payout structure sounds simple, though it is technically complex to run. FETH would keep 85% of gross staking rewards. The remaining 15% would go to service providers.

Fidelity is direct about the caveat, saying the payouts themselves are not guaranteed. Their size would depend on the actual amount staked and on market conditions.

Staking through an ETF also carries the usual network risks. If a node operator breaks Ethereum's consensus rules, staked coins can face slashing, a partial loss of funds. Fidelity shifts operational responsibility to its operator partners, but the financial risk still sits with the fund itself.

• Who gets the 15%: the fund sponsor, custodians, and node operators, including Blockdaemon, Figment, and Galaxy.
• Net rewards first cover the fund's operating expenses.
• Fidelity would pay out the remainder to shareholders in cash each quarter.
• If staking rewards fall short, the fund can sell some of its ETH.

Why is this happening now?

Back in October 2025, Grayscale became the first regulated spot ETF issuer in the US to enable staking. The following month, the IRS issued formal guidance for crypto trusts.

That bulletin let qualifying trusts stake assets without losing their grantor-trust tax status. This guidance is what removed the main legal obstacle for other issuers.

The stakes are high for issuers. Network staking on ETH currently yields around 3% a year, and funds without this feature lose out on returns that rivals already pass to shareholders. The race to add staking has become a matter of competitiveness. It is no longer just a prospectus footnote.

Not every attempt succeeded. Bitwise filed a similar staking proposal for its ETH ETF back in September 2025 but eventually withdrew it.

21Shares added a similar feature to its fund that same year. BlackRock took a different route: in February 2026, it launched a separate product, the iShares Staked Ethereum Trust, instead of amending its main trust.

This fits a broader pattern: several major financial institutions launched staking products for institutional clients this summer, and Fidelity is now bringing similar functionality to a familiar retail ETF.

What does this mean for ETH holders?

For FETH investors, the change adds a type of income the fund never offered before. Fund shares used to track only the price of ETH. Now they would also carry staking income.

Seeking Alpha contributor Ryne Mauck wrote back in May that FETH's lack of staking put it at a relative disadvantage compared to staking-enabled products from Grayscale and BlackRock, which were already paying shareholders.

For some investors, the regular cash payouts matter more than staking itself. Traditional ETFs rarely pay quarterly dividends, so this mechanism pulls ETH ETFs closer, in structure, to familiar income products like bond funds.

There is a flip side, too. IRS rules require quarterly distribution of net staking rewards, so the fund would need to regularly turn part of its holdings into cash. If staking rewards fall short, Fidelity could sell ETH from the portfolio specifically to cover payouts.

Despite lacking staking until now, FETH remains one of the most successful ETH ETFs by inflows. Since its July 2024 launch, the fund has pulled in roughly $2.13 billion in cumulative net investment, according to Farside Investors.

Ukrainians planning to buy Ethereum for hryvnia are also watching decisions like this from major ETF providers. They shape long-term demand for the asset and affect its liquidity on global venues.

What happens next?

The SEC still has to review and approve Fidelity's amended filing, so an exact launch date for staking is not set yet. Based on how Grayscale and 21Shares fared, approval for funds that already exist tends to move fairly fast.

If Fidelity's move clears without delays, rivals like BlackRock may rethink their approach and fold staking directly into existing ETH ETFs instead of keeping it as a separate product. For FETH shareholders, this would be the first real test of how a large regulated fund shares network rewards. Until formal approval, the fund's shares will keep trading like an ordinary spot ETH ETF, with no payouts at all. Investors should watch the registration statement's status on the SEC's site, since its effective date is what will determine when staking actually starts.