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Fidelity seeks SEC approval to let its spot Ethereum ETF stake ETH

The filing would allow FETH to stake up to 100% of its Ethereum and, if approved, distribute staking rewards to investors as quarterly cash.

Reported · Written up by our desk · Ethereum

Fidelity has filed a pre-effective amendment with the SEC seeking permission for its spot Ethereum ETF, FETH, to stake the Ethereum the fund holds, a step that would turn the product into a yield-bearing structure. Decrypt reports that the fund would stake up to 100% of its holdings and distribute staking rewards to investors as quarterly cash distributions, subject to regulatory approval.

The filing would also change FETH’s stated objective. FETH currently tracks the Fidelity Ethereum Reference Rate, adjusted for fees, but with staking the goal becomes that index plus an amount based on staking rewards, with the trust expected to outperform the index before expenses.

Fidelity plans to route staked ETH through custodians, including Anchorage Digital, BitGo, and Fidelity Digital Assets, and then to one or more node operators that run the validator infrastructure. Under normal conditions, the fund would not be required to stake any minimum amount, and rewards would be split among node operators, custodians, and Fidelity as fees, with the trust retaining a portion.

The proposal follows Grayscale and BlackRock, which moved earlier to add staking to their U.S. spot Ethereum products after a Treasury and IRS safe harbor. Decrypt notes that distributions would not be guaranteed and could be suspended or ended at Fidelity’s discretion, and that staking introduces slashing risk and possible liquidity limits due to unstaking lockups.

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