Fidelity files to let its Ethereum ETF stake and pay rewards to investors
Fidelity asked the SEC to let its spot Ethereum ETF stake up to 100% of fund assets and pass rewards to holders as cash, a move that would pressure rival issuers to follow.
Fidelity has asked the US Securities and Exchange Commission for permission to stake the ether held inside its spot Ethereum ETF and funnel the resulting rewards back to shareholders as quarterly cash distributions, pending regulatory approval.
The Tuesday filing would amend the Fidelity Ethereum Fund (FETH) prospectus. Under the new language, the fund could stake up to 100% of its ETH holdings under normal market conditions. Ether set aside for redemptions, expenses and liquidity needs would stay off-limits. The practical upshot: idle ether that now sits static in custody could start earning yield.
FETH would keep 85% of staking rewards. The remaining 15% would cover staking fees. Fidelity expects staking to begin “as soon as practicable” after the prospectus date, though quarterly distributions are not guaranteed and remain at the fund’s discretion. The preliminary prospectus is still subject to change before the registration statement becomes effective.
Fidelity, the fifth-largest US asset manager, runs FETH alongside a suite of other digital asset funds. The firm tied the filing to its SEC registration statement dated Aug. 11, 2026.
The move sharpens competition with peers that already offer staking. Grayscale became the first US issuer to enable staking in spot crypto exchange-traded products in October 2025. BlackRock followed with its separate iShares Staked Ethereum Trust ETF (ETHB) in February 2026. Bitwise also pursued staking for its Ethereum ETF, then withdrew the proposal in September 2025.
That context shapes FETH’s positioning. The fund had logged roughly $2.13 billion in cumulative net inflows since its July 2024 launch as of Aug. 11, according to Farside Investors. Ahead of Wednesday’s US markets open, FETH was leading pre-market gains across most ETH funds, up 2.4%, per Yahoo Finance data.
Seeking Alpha contributor Ryne Mauck argued in May that FETH’s lack of staking placed it at a “relative disadvantage” against staking-enabled products from Grayscale and BlackRock.
The filing leaves several questions unanswered. Neither source addresses how staking rewards would be taxed when distributed inside the ETF wrapper. Neither names the custody or staking infrastructure provider Fidelity would use. Slashing risk, the possibility of lost ether if a validator misbehaves, is baked into staking but goes undiscussed in the reporting. The SEC has not signaled a timeline for a decision on the amendment.
