Fidelity Moves to Stake up to 100% of Its Ether ETF

Key Takeaways

• Fidelity has filed to let FETH stake up to 100% of ETH and distribute rewards quarterly.
• FETH would keep 85% of rewards, pressuring Blackrock and Grayscale to compete on yield.
• Fidelity plans 15% staking fees and quarterly cash payouts if approved by the SEC.

Fidelity Plans Quarterly Cash Payouts From FETH Staking Rewards

Fidelity is seeking to turn its spot ethereum fund from a passive price tracker into an income-producing crypto product.

The asset manager filed a pre-effective amendment with the Securities and Exchange Commission on Aug. 11 that adds staking to the Fidelity Ethereum Fund (FETH). The filing would change the fund’s objective to track ether’s price while also capturing staking rewards.

Fidelity said the added income means FETH is expected to outperform its ether reference rate before fees and other expenses. The amendment remains preliminary and must become effective before the changes can take effect.

Fidelity Could Stake Nearly All of FETH’s Ether

Under normal conditions, FETH will look to stake up to 100% of its ETH, although Fidelity would retain some unstaked assets when needed for redemptions, expenses or liquidity management.

Anchorage Digital, Bitgo and Fidelity Digital Assets would custody the fund’s ether and facilitate staking with outside node operators. The staking program carries a 15% fee shared among Fidelity, custodians and node operators. FETH would retain the other 85% before fund expenses and other obligations are deducted.