The Fidelity Ethereum Fund could stake up to 100% of its ether, keep 85% of the rewards and convert what is left into quarterly cash distributions.
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Posted August 13, 2026 at 6:46 am EST.
Fidelity has moved to turn its spot ether ETF into a yield product. In an amended registration statement filed Tuesday, the sponsor of the $903 million Fidelity Ethereum Fund (FETH) disclosed plans to stake the trust’s ether and pay shareholders quarterly cash distributions out of the rewards.
The filing says the fund may stake up to 100% of its ether under normal circumstances, with no minimum required, while reserving whatever it needs for redemptions, expenses and its liquidity program. Anchorage Digital Bank, BitGo Bank & Trust and Fidelity Digital Assets custody the ether and will arrange the staking, with Blockdaemon, Figment and Galaxy named as node operators. Staking fees are set at a flat 15% of all rewards received, shared among the sponsor, the custodians and the node operator. The trust retains 85%, applies it to expenses first, then converts the remainder to dollars ahead of each payment date. Staking is expected to begin as soon as practicable after the prospectus takes effect.
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The trade-off is liquidity. Staked ether is inaccessible during activation and exit windows, so the sponsor reserves the right to extend redemption settlement or pay redemptions in cash rather than ether. Slashing penalties are possible, the custodians’ liability for a node operator’s conduct is limited, and none of the staked assets carry FDIC or SIPC protection. Distributions are not guaranteed and can be suspended if the trust’s liabilities exceed the rewards it collects.
The opening came from tax guidance. An IRS safe harbor issued in November 2025 lets qualifying crypto trusts stake without forfeiting grantor-trust status, provided they distribute net rewards at least quarterly. Grayscale switched on staking in its ether funds last October and paid the first distribution in January, and 21Shares followed with its own amendment. BlackRock went the other way, launching a separate staked ether ETF in March.
Related Listen: Why an Ethereum Proposal to Zero Out Staking Yield Sparked a Revolt
AI-assisted content: This article was produced with the assistance of AI tools and was reviewed, edited, and fact-checked by a member of the Unchained editorial team before publication.
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