Fidelity moves to add staking, quarterly payouts to near $900 million ether ETF
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Summary
Fidelity intends to add ether staking and quarterly cash distributions to its Fidelity Ethereum Fund (FETH), which currently holds $898 million in net assets. The fund would retain 85% of the gross staking rewards, with the remaining 15% allocated to service providers such as Blockdaemon, Figment, and Galaxy. This update follows an IRS safe harbor bulletin allowing crypto trusts to stake assets without losing tax status, joining similar moves by Grayscale and 21Shares, while BlackRock has launched a separate staking product.
Why it matters
The addition of staking and cash distributions could enhance the yield for FETH investors by converting staking rewards into quarterly payouts. The IRS safe harbor bulletin referenced enables these crypto trusts to maintain their tax status while staking, potentially influencing how crypto funds structure their offerings. This change aligns Fidelity with other major industry players who are adopting staking features.
Key context
FETH is one of the largest spot ether ETFs in the United States, managing $898 million in assets. The IRS safe harbor bulletin issued in November 2025 permits qualifying crypto trusts to stake assets without forfeiting their grantor-trust tax status, which is crucial for enabling staking within such funds. Fidelity's fund could stake up to 100% of its ether under normal conditions but will keep some ETH liquid for redemptions and expenses. Net staking rewards must be distributed at least quarterly, per IRS regulations.
Key numbers and entities
Fidelity Ethereum Fund (FETH), $898 million net assets. Fidelity retains 85% of gross staking rewards. Service providers receive 15% of rewards. Named node operators are Blockdaemon, Figment, and Galaxy. The IRS safe harbor bulletin was issued in November 2025. Grayscale, 21Shares, and BlackRock are mentioned as other industry participants addressing staking in various ways.
What remains unclear
The source does not specify an exact timeline for when Fidelity will implement the staking and quarterly payouts. It also does not detail the minimum amount of ether that will be staked, only stating no minimum is set. Further specifics about how the fund will manage ETH liquidity beyond the general statement are not provided.