Fidelity is preparing to add staking to its Fidelity Ethereum Fund, potentially giving investors a new source of income from the ether held by the nearly $900 million fund.
The proposed changes would allow the fund to stake as much as 100% of its ether under normal conditions, although Fidelity has not set a minimum staking level. The fund would keep some ether available to meet redemptions, c over expenses and maintain liquidity.
Staking Could Add New Investor Income
Under the plan, Fidelity would retain 85% of gross staking rewards. The remaining 15% would go to the fund sponsor, custodians and node operators that support the staking process.
Fidelity has identified Blockdaemon, Figment and Galaxy as node operators for the fund. The arrangement would allow investors to gain exposure to Ethereum staking without directly managing validators or locking up their own ether.
The fund would first use net staking rewards to c over expenses. It would then distribute the remaining proceeds to shareholders on a quarterly basis. Fidelity could also sell some ether to generate the cash needed for those payments.
ETF Competition Intensifies
The move comes as asset managers increasingly look to make staking a feature of U.S. ether investment products. Grayscale and 21Shares have also pursued staking within existing ether funds, while BlackRock has taken a different approach with a separate staking product.
Recent regulatory and tax developments have helped clear a path for these offerings. An IRS safe-harbor bulletin issued in November 2025 allows qualifying crypto trusts to stake assets without losing their grantor-trust tax treatment.
For Fidelity, adding staking could make its ether fund more competitive by combining price exposure with potential cash income. However, staking rewards can fluctuate, and the amount ultimately distributed will depend on rewards earned, fund expenses, liquidity needs and regulatory requirements.
The proposed changes would therefore give FETH a more income-oriented structure while preserving its core purpose of tracking ether. The plan also signals how competition among U.S. crypto investment products is shifting beyond simple exposure to the price of digital assets.
