Fidelity Ethereum Fund staking and quarterly payouts
Fidelity Ethereum Fund staking and quarterly payouts headline Fidelity’s move to add staking and scheduled distributions to its Fidelity Ethereum Fund (FETH), which holds about $898 million in net assets. Under the change, the fund could stake as much as 100% of its ether under normal conditions. The plan would also provide for quarterly cash distributions sourced from the fund’s staking proceeds and applies to one of the largest spot ether ETFs in the U.S.
The Fidelity Ethereum Fund (FETH) would be able to stake its ether holdings, with the fund able to stake as much as 100% of its ether under normal conditions. The planned staking arrangement names block validator service providers as node operators and identifies Blockdaemon, Figment and Galaxy as the node operators for the fund. Under the plan, staking would convert idle ether holdings into staked positions that generate gross staking rewards for the fund’s investors.
FETH would retain 85% of gross staking rewards while the remaining 15% would be allocated to the fund sponsor, custodians and node operators. Net staking rewards would first be applied to cover fund expenses and fees before any distributions are made. The fund’s net staking rewards are designated for cash distributions and those distributions would be made at least quarterly.
To meet cash distribution requirements, the fund may sell some ETH to raise liquidity for payouts. The arrangement specifies that staking proceeds and available liquid assets together will be used to fund the quarterly cash distributions to shareholders. The structure preserves the sequencing that expenses are paid first from net rewards and that distributions must occur on a quarterly basis or more frequently.
An IRS safe harbor bulletin issued in November 2025 permits qualifying crypto trusts to stake assets without losing grantor-trust tax status. The shift follows that November 2025 bulletin and the bulletin is cited as the regulatory context for staking by qualifying crypto trusts. The bulletin’s allowance for staking while preserving grantor-trust tax treatment is the regulatory backdrop referenced in filings related to ether fund staking.
Fidelity would join firms such as Grayscale and 21Shares in adding staking to ether funds, while BlackRock introduced a separate staking product. The filings describe Fidelity’s proposed staking change in the same industry context where other asset managers have moved to add staking or related products. FETH is identified as one of the largest spot ether ETFs in the U.S., placing the fund among major industry participants that are adjusting product structures in response to the November 2025 safe harbor bulletin.
Fidelity has introduced staking and quarterly payouts to its Ethereum Fund, reflecting the fund’s large scale and its conversion of ether holdings into staking positions. Under the plan, the fund retains the majority of gross staking rewards while a portion is allocated to service providers; net rewards are first used to cover fund expenses and then to support quarterly cash distributions. The change aligns the fund with other asset managers adapting ether products to include staking or related payout structures, positioning it among the largest spot ether ETFs in the U.S.
