Fidelity's amended registration statement for the Fidelity Ethereum Fund (FETH) clears the path for the issuer to stake up to the full complement of the fund's Ethereum holdings, a move that would make FETH the first U.S. spot Ethereum ETF to pursue native staking at scale. The filing, which surfaced this week, specifies that staking rewards would be distributed to shareholders as cash rather than reinvested in additional ETH — a structural choice that effectively converts yield into a distribution while leaving the fund's principal ETH allocation unchanged.
The cash-payout mechanism introduces a subtle but meaningful divergence from how staking works at the protocol level. On Ethereum, validators earn newly issued ETH as rewards; by converting that yield to cash before it reaches shareholders, FETH creates a persistent drag on the ETH-denominated return an investor would capture by holding the asset directly. Over a full year, assuming a 3% nominal staking yield and a 0.25% management fee, the cash-distribution model would leave shareholders with roughly 2.75% in cash yield but zero increase in their ETH-deninated position — versus a direct staker who would see their ETH balance grow by the full 3% before fees.
FETH held approximately $1.2 billion in net assets as of its latest monthly disclosure, trailing only BlackRock's ETHA and Grayscale's ETHE among U.S. spot Ethereum funds. The fund's expense ratio sits at 0.25%, matching BlackRock and undercutting Grayscale's 1.5%. With the staking amendment, Fidelity is effectively using yield as a competitive lever: the cash payout becomes a visible, quarterly line item that can be marketed alongside the lower fee, even as the underlying ETH exposure per share remains static.
| Fund | Ticker | AUM (est.) | Expense Ratio | Staking Status |
|---|---|---|---|---|
| --- | --- | --- | --- | --- |
| iShares Ethereum Trust | ETHA | $3.8B | 0.25% | Not filed |
|---|---|---|---|---|
| Grayscale Ethereum Trust | ETHE | $6.1B | 1.50% | Not filed |
| Fidelity Ethereum Fund | FETH | $1.2B | 0.25% | Filed — up to 100% |
|---|---|---|---|---|
| Bitwise Ethereum ETF | ETHW | $0.4B | 0.20% | Not filed |
| Franklin Templeton | EZET | $0.2B | 0.19% | Not filed |
The SEC has not yet declared the amended registration effective. Under standard review timelines, the next formal action window falls in late August 2026; the commission could approve, request additional changes, or allow the filing to become effective by operation of law if it takes no action within the prescribed period. Market participants are watching whether BlackRock or Franklin Templeton file similar amendments — both have publicly acknowledged staking as a feature under evaluation but have not yet submitted registration changes.
ETH traded at $1,892.04 with 24-hour volume of $7.5 billion as the filing circulated, up 0.7% on the day and 1.4% over the prior week. Total crypto market capitalization stood at $2.27 trillion, with Bitcoin dominance at 56.2% and Ethereum dominance at 10.1%. The price reaction was muted, suggesting the market had partially priced in the possibility of staking-enabled ETFs since the SEC's May approval of the initial spot Ethereum ETF wave.
The cash-distribution model also raises tax-efficiency questions for taxable accounts. Staking rewards distributed as cash are generally treated as ordinary income in the year received, whereas an increase in ETH holdings would defer recognition until sale. For institutional allocators with tax-sensitive mandates, this distinction could influence whether FETH or a non-staking peer like ETHA fits the portfolio construction.
Fidelity's custody arrangement with Coinbase Prime remains unchanged by the amendment; staked ETH would be delegated to validators selected by Coinbase's staking infrastructure. The filing does not disclose a minimum staking threshold, leaving open the possibility that FETH could stake a fraction of holdings initially and scale up. The next key date is the SEC's effectiveness determination, expected by August 29 under the current review calendar.