Fidelity Investments is seeking regulatory approval to add Ethereum staking to its spot Ether exchange-traded fund, the Fidelity Ethereum Fund (FETH), potentially giving investors an additional source of yield on top of their exposure to ETH.
According to a preliminary filing with the U.S. Securities and Exchange Commission (SEC), Fidelity could stake as much as 100% of FETH’s Ethereum holdings under normal market conditions, excluding ETH that needs to remain available for redemptions, expenses and liquidity requirements.
If implemented, the move would transform FETH from a product offering primarily passive exposure to Ether into an investment vehicle that could also generate staking rewards.
Fidelity Plans to Keep 85% of Staking Rewards
Under the proposed structure, FETH would retain approximately 85% of the staking rewards generated by its Ethereum holdings.
The remaining 15% would be allocated toward staking-related fees.
Fidelity also plans to make quarterly cash distributions to investors based on the staking rewards generated by the fund. However, the filing makes clear that distributions are not guaranteed and could vary depending on staking activity, network conditions and other factors.
The asset manager expects staking to begin “as soon as practicable” after the prospectus becomes effective.
The proposal is still preliminary, meaning its terms could change before Fidelity’s registration statement becomes effective.
FETH Could Stake Nearly Its Entire Ethereum Holdings
One of the most significant elements of Fidelity’s proposal is the potential scale of the staking operation.
Under normal circumstances, the fund could stake up to 100% of its ETH holdings, apart from the portion required to meet redemption requests, operating expenses and other liquidity requirements.
That could allow a substantial portion of FETH’s underlying Ethereum to participate in the network’s proof-of-stake system.
For investors, the difference is important. A traditional spot Ether ETF provides exposure to ETH’s price movements, while a staking-enabled fund can potentially generate additional returns from putting its underlying ETH to work on the Ethereum network.
However, staking also introduces additional operational and market considerations, including validator risks, liquidity constraints and the possibility of delays or other limitations when unstaking assets.
Fidelity Follows Growing U.S. Ether Staking Trend
Fidelity’s proposal comes as staking becomes increasingly common among U.S. Ethereum investment products.
Grayscale became the first U.S. issuer to enable staking in spot crypto exchange-traded products in October 2025.
BlackRock subsequently launched the iShares Staked Ethereum Trust ETF (ETHB) in February 2026, giving U.S. investors another regulated vehicle offering Ethereum exposure alongside staking rewards.
Bitwise also sought to introduce staking to its Ethereum ETF but withdrew its proposal in September 2025.
The growing competition has increased pressure on Ether ETFs that do not offer staking.
In May, Seeking Alpha contributor Ryne Mauck argued that FETH’s lack of staking placed the fund at a relative disadvantage compared with products from Grayscale and BlackRock that provide investors with access to staking-related yield.
Fidelity’s latest filing could therefore help close that gap and make FETH more competitive within the expanding U.S. Ether ETF market.
FETH Has Already Attracted Billions in Inflows
Despite not previously offering staking, FETH has attracted substantial investor demand since launching in July 2024.
According to Farside Investors, the fund had accumulated approximately $2.13 billion in cumulative net inflows as of August 11.
The potential addition of staking could give Fidelity another mechanism for attracting capital as competition among Ethereum investment products intensifies.
The proposed structure also creates a potential new source of income for investors without requiring them to directly manage validators, lock up ETH themselves or interact with decentralized staking protocols.
Instead, investors would gain exposure to the staking process through their ETF shares.
Staking Could Change the Economics of Ether ETFs
The proposal reflects a broader evolution in the U.S. crypto ETF market.
When spot Ether ETFs first became available, investors primarily gained regulated exposure to ETH’s price without directly participating in Ethereum’s proof-of-stake rewards.
Staking-enabled products change that equation.
If ETF providers can stake a significant portion of their underlying ETH, investors may receive an additional yield component while retaining the convenience of holding a traditional exchange-traded security.
That could become an important differentiator as asset managers compete for institutional and retail capital.
For Fidelity, the proposed 85% share of staking rewards means the company would retain the majority of the rewards generated by FETH, while investors would receive the economic benefit through planned distributions.
What Happens Next
Fidelity’s filing remains subject to regulatory review and potential changes before becoming effective.
If approved, the company expects to begin staking FETH’s Ethereum as soon as practicable after the relevant prospectus becomes effective.
The proposal would put Fidelity directly alongside other major asset managers offering or pursuing staking-enabled Ethereum investment products.
With more than $2 billion in cumulative net inflows already recorded, FETH enters this next stage from a position of significant market adoption.
The key question now is whether Fidelity’s staking proposal can translate that existing demand into an additional yield advantage for investors while maintaining the liquidity, custody and operational standards expected of a regulated U.S. ETF.
