Fidelity has filed an amendment to its Ethereum ETF prospectus that would allow the fund to stake up to 100% of its holdings and distribute the resulting rewards to shareholders on a quarterly basis, pending SEC approval.
The Boston asset manager's FETH fund currently holds Ethereum without staking it. The S-3/A filing accepted by the SEC on July 24 and made public August 10 outlines a new operational structure in which the fund would delegate its ETH to staking providers and pass through the quarterly rewards as cash distributions to investors. The distributions are not guaranteed and would depend on the performance of the underlying staking infrastructure.
Fidelity is one of the largest institutional asset managers in the United States, with over $12 trillion in assets under administration. The firm launched its spot Ethereum ETF in June 2024 alongside its spot Bitcoin ETF, both of which moved into fee-competition dynamics with competitors including Grayscale, BlackRock and iShares within weeks. Ethereum staking has become a major revenue source for cryptocurrency custodians and fund managers; the Ethereum network currently has 32.3 million ETH staked across all validators, according to Lido data, generating an average annual yield of 3.2% as of August 2026.
The structure Fidelity proposes is not new to the cryptocurrency fund space. Grayscale's Ethereum Mini Trust began distributing staking rewards to shareholders in 2024. Other spot Bitcoin and Ethereum ETF issuers including Invesco and Franklin Templeton have begun exploring staking integration for their crypto-focused products as the asset class matures and competitive pressure on management fees increases.
The SEC has not yet granted effectiveness to the amendment. Fidelity's filing does not specify a timeline for approval, and the agency may request additional disclosures regarding staking risk, counterparty exposure, or operational procedures before signing off. The firm said in its prospectus that it would use third-party staking providers rather than operating its own validator infrastructure.
Competitive pressure is driving institutional custodians to add operational strategies that generate ancillary yield. If the SEC approves the amendment, FETH would become one of the largest staking-enabled Ethereum vehicles available to U.S. retail investors, competing directly with existing staked-Ethereum products and pushing other ETF issuers toward feature parity.
The number to watch is the amount of ETH that Fidelity actually stakes once the SEC clears the amendment; a 100% staking cap does not guarantee full deployment, and Fidelity's actual deployment rate will determine how aggressively the firm intends to pursue staking revenue in this product.
