Fidelity is adding staking to its Ethereum exchange-traded fund, a move that will let the fund earn rewards on its Ether and pay them out to investors in cash each quarter. The change to the Fidelity Ethereum Fund (FETH) comes months after BlackRock launched its own staking version.
How the staking will work
Under the new plan, FETH can stake up to 100% of its ETH holdings under normal conditions. There's no minimum staking requirement, but the fund will keep some Ether on hand for redemptions, expenses, and liquidity needs.
The fund keeps 85% of gross staking rewards. The remaining 15% goes to the sponsor, custodians, and node operators. Net rewards first cover fund expenses, and whatever's left gets distributed to shareholders quarterly in cash. If needed, the fund may sell a bit of Ether to fund those distributions.
The race for staking ETFs
Fidelity isn't first to this. BlackRock debuted its staking Ethereum ETF, ETHB, back in March. It opened with $100 million in assets and saw north of $15 million in first-day trading volume. Today, ETHB sits as the fifth-largest Ethereum ETF with $577 million in net assets.
FETH holds nearly $900 million in net assets, which puts it ahead of ETHB for now. But BlackRock's main Ethereum ETF still leads the pack with $5.6 billion. The staking feature could shift some demand, though it's too early to say how much.
Fidelity's broader crypto push
The staking addition isn't Fidelity's only recent crypto move. The firm also launched its own stablecoin, the Fidelity Digital Dollar (FIDD), pegged 1:1 to the US dollar and backed by reserves. That puts Fidelity in a different lane from most ETF issuers, which tend to stick to fund products.
For now, the staking change is the headline. Fidelity hasn't said exactly when the new feature goes live, but the filing is out and investors are waiting on the first quarterly distribution.
