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Fidelity Adds Staking to Its $898 Million Ethereum Fund

Fidelity wants to add staking and quarterly payouts to FETH, one of the biggest spot ether ETFs in the U.S. The move follows new IRS room for crypto trusts and fits into the race with Grayscale and 21Shares.

By Zenz van der Wielen
• 2 min read
Fidelity Adds Staking to Its $898 Million Ethereum Fund

Key Takeaways

  • Fidelity is preparing staking and quarterly payouts for its Fidelity Ethereum Fund, which has $898 million in net assets.
  • Under normal conditions, the fund could stake up to 100% of its ETH, while keeping ETH available for redemptions and liquidity needs.
  • Net staking rewards will be used for fund expenses and then paid out as cash quarterly distributions.

Fidelity is preparing staking and quarterly payouts for its Fidelity Ethereum Fund (FETH), one of the biggest spot ether ETFs in the U.S. The fund has $898 million (€778 million) in net assets and could stake up to 100% of its ETH under normal conditions, although Fidelity is not setting a minimum.

Staking in the Fund

The amended registration statement says the fund will keep ETH available for redemptions, expenses, and other liquidity needs. Fidelity wants to combine staking with the practical demands of an exchange-traded fund, where investors need to be able to move in and out at any time.

The move fits into a broader shift in the spot ether ETF market. Fidelity would be joining Grayscale and 21Shares, which are already adding staking to existing ether funds. BlackRock, meanwhile, chose a different route and launched a separate staking product.

New Tax Room

The timing is tied to an IRS safe harbor bulletin from November 2025, which allows qualifying crypto trusts to stake assets without losing their grantor trust status. That matters for ether fund issuers, because the tax treatment of staking income has long been a drag on this kind of product.

Fidelity would keep 85% of the gross staking rewards. The other 15% goes to the fund manager, custodians, and node operators. Blockdaemon, Figment, and Galaxy are named as node operators for the trust.

What Investors Will Notice

The net staking rewards will first be used to cover fund expenses and then paid out as cash quarterly distributions. Under IRS rules, funds that generate net staking rewards must distribute them at least every quarter. Fidelity also says it could sell part of the ETH if needed to free up cash for payouts.

For European crypto followers, this shows how quickly spot ether products are evolving from pure price tracking into funds with extra income streams. That could matter for the broader debate over how regulated crypto investment products in the U.S. and Europe structure their returns, especially now that staking is becoming a bigger part of product design.

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