Fidelity Investments has filed to add staking to its spot Ethereum ETF, the Fidelity Ethereum Fund (FETH), in a mid-August SEC amendment that would let the fund stake up to 100% of the ETH it holds and pass rewards to shareholders as quarterly cash distributions, according to Decrypt and Cointelegraph.
What happened?
Fidelity submitted a pre-effective amendment to its FETH registration statement on Aug. 11, 2026, seeking permission to stake the Ether the fund custodies, Decrypt reported. Cointelegraph dated the filing to Aug. 12; the two outlets otherwise describe the same document. Under the proposal, the fund could stake “up to 100% of its Ether under normal conditions, excluding ETH reserved for redemptions, expenses and liquidity needs,” per Cointelegraph.
The economics, as reported by Cointelegraph, would send 85% of staking proceeds to FETH, with the remaining 15% going toward operational fees split among node operators, custodians and Fidelity. The fund plans to convert staked ETH into dollars and make quarterly cash distributions to shareholders of record — though, as Decrypt noted from the filing, those payouts are discretionary rather than guaranteed and Fidelity can suspend or end them at its discretion.
Cointelegraph reported that FETH had accumulated roughly $2.13 billion in net inflows since its July 2024 launch as of Aug. 11. The filing follows separate moves by exchanges and issuers to build staking into US Ethereum products; The Block has reported that Cboe BZX filed to add staking to Fidelity’s fund at the exchange level, part of the same broader push.
Why does it matter?
Staking is how holders earn native yield on Ethereum by helping secure the network, and until 2025 US spot ETH ETFs were barred from doing it — leaving fund investors without the on-chain rewards that direct holders could capture. Adding staking narrows that gap. Fidelity is not first: Grayscale began paying ETH staking rewards in October 2025 and BlackRock launched its iShares Staked Ethereum Trust in February 2026, per Cointelegraph. Fidelity’s filing signals that staking is becoming a standard feature rather than a differentiator among the largest issuers.
The filing is candid about the trade-offs. Staked ETH carries slashing risk — penalties if a validator misbehaves — and can be locked during unstaking, a liquidity constraint for a fund that must meet redemptions. Decrypt reported that Fidelity plans to manage that by extending redemption timelines if needed. In other words, the yield comes with operational and liquidity risks that the fund is disclosing up front rather than papering over.
How does staking change an ETH ETF?
A non-staking spot ETH ETF simply tracks the price of Ether. A staking-enabled fund also earns protocol rewards on the ETH it holds, which can offset fees or be distributed to shareholders. Fidelity’s structure routes those rewards into quarterly cash payments, and the filing frames the fund’s goal as tracking its benchmark plus an amount reflecting staking rewards. For a broader look at Ethereum coverage, see our Ethereum news hub.
What cleared the path for staking ETFs?
US spot ETH ETFs launched in 2024 without staking, in part because of uncertainty over how staking rewards would be treated for securities and tax purposes. Decrypt reported that Grayscale and BlackRock moved first after a Treasury and IRS safe harbor clarified the tax treatment, opening the door for issuers to stake fund assets. Fidelity expects staking rewards to count as income for tax purposes, per Decrypt’s reading of the filing. The sequence to date, according to Cointelegraph, is summarized in the table below:
| Issuer / fund | Staking status | Timing |
|---|---|---|
| Grayscale (ETHE / mini) | First US ETF to pay ETH staking rewards | October 2025 |
| BlackRock (iShares Staked Ethereum Trust) | Staking product launched | February 2026 |
| Fidelity (FETH) | Filed to add staking; pending review | August 2026 |
Fidelity’s filing therefore reads less as a first mover and more as a large issuer matching features its biggest rivals already offer — a sign staking is becoming table stakes for competitive spot ETH products rather than a novelty.
What to watch next
The amendment is a proposal, not an approval: it must clear SEC review before FETH can begin staking, and Fidelity said it expects to start “as soon as practicable” after the prospectus becomes effective, per Cointelegraph. Watch for the SEC’s response, any revisions to the reward split or redemption mechanics during review, and whether rival issuers file comparable amendments. Investors should also note that quarterly distributions are not guaranteed and depend on network conditions, validator performance and the fund’s discretion.
Sources: Decrypt — Fidelity Files to Let Its Ethereum ETF Stake and Pay Investors; Cointelegraph — Fidelity Files to Add Staking to Ethereum ETF; The Block — Cboe BZX files to add staking to Fidelity’s Ethereum ETF
This is news reporting, not investment advice.
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David Okafor leads DeFi and Web3 coverage at STNews with 7 years of experience in decentralized finance research. Previously a research analyst at a16z crypto, David has published in-depth protocols analyses on Uniswap, Aave, and Lido. He holds a B.S. in Computer Science from Stanford and is a certified Ethereum developer. David's work focuses on yield mechanisms, governance tokens, and Layer-2 scaling solutions.
Conflicts of interest
I do not invest in early-stage tokens. Long-term holdings disclosed at the bottom of each article.
