Fidelity seeks SEC approval for Ethereum ETF staking
Fidelity's Ethereum ETF could stake up to 100% of its ETH, aiming to generate quarterly cash payouts for shareholders once SEC approval is granted.
Megan Sutherland 6 min read
Fidelity has moved to turn its spot Ethereum ETF into a yield-generating product, filing an amended registration with the US Securities and Exchange Commission that would let the fund stake nearly all of its holdings and pass staking income directly to shareholders.
Why staking wasn’t part of the original ETF approvals
When the SEC first approved spot Ethereum ETFs in 2024, it did so on the basis of products that simply held ETH and tracked its price, without a staking component. Regulators at the time treated staking as raising separate questions from those addressed by a plain spot product, including how staking rewards should be characterized for securities law purposes, how the risk of slashing penalties should be disclosed to shareholders, and how a fund could offer daily liquidity to investors while some portion of its underlying assets were locked in the multi-week validator exit process described elsewhere in Ethereum’s staking mechanics. Getting a staking-enabled ETF approved has therefore required issuers to satisfy the SEC on each of those points individually, which is why staking capability has arrived as a series of separate amendments and follow-on approvals rather than being part of the original wave of ETF launches.
What Fidelity filed
Fidelity submitted an updated Form S-3/A on August 11, 2026, under file number 333-297005, updating an earlier registration from June 2026 that did not permit staking. The amendment expands the objective of the Fidelity Ethereum Fund (FETH) beyond simply tracking the Fidelity Ethereum Reference Rate: the fund would now also aim to earn staking rewards, with the ability to stake up to 100% of its ETH and no minimum staking requirement written into the filing.
Under the proposed structure, the fund would keep 85% of gross staking rewards, with the remaining 15% covering a flat staking fee split among Fidelity’s sponsor entity, its custodians and three node operators. Fidelity plans to distribute net staking income to shareholders as quarterly cash payouts. As of the filing date, no staking activity had begun and no distributions are guaranteed, since the amendment is still pre-effective. Fidelity cannot begin staking FETH’s ether until the SEC formally declares the registration effective.
Why staking inside an ETF is structurally different from staking directly
Staking ETH directly, by running or delegating to a validator, and staking through an ETF share are economically related but operationally distinct. A direct staker holds the ETH themselves, in a wallet under their own or a custodian’s control, and receives rewards directly to that address as they are earned, net of any fee charged by a staking service if one is used. An ETF investor, by contrast, never touches the underlying ETH at all; they hold a share in a fund that owns the ETH, stakes it through the fund’s chosen infrastructure, and passes the resulting economics back to shareholders, whether through net asset value appreciation or, as Fidelity’s proposed structure would do, periodic cash distributions. The ETF wrapper adds a layer of intermediation, and with it, a layer of fees, in this case Fidelity’s proposed 15% cut of gross rewards split among the sponsor, custodians and node operators, but it also removes the technical burden of running or selecting validator infrastructure, and it allows the staking exposure to sit inside a standard brokerage or retirement account rather than requiring direct custody of crypto.
The tax and custody trade-offs at stake
For many investors, particularly those holding ETH exposure inside tax-advantaged or registered accounts, an ETF structure is the only practical way to gain staking exposure at all, since direct crypto holdings are often ineligible for those account types or come with more complex tax reporting obligations. The trade-off is that the investor is relying entirely on the fund’s chosen custodians and node operators to perform correctly, has no direct claim on specific ETH held by the fund, and is exposed to whatever fee structure the issuer sets, which in Fidelity’s proposed model would take 15% of gross rewards before any distribution reaches shareholders. That fee is broadly in line with what other staked ETH ETFs have charged once sponsor, custodian and node operator costs are combined, though the exact split and resulting net yield differs by issuer and by how much of the fund’s ETH is actively staked at a given time.
Part of a broader shift toward staked ETH products
Fidelity is not the first major issuer to move in this direction. BlackRock, which kept its original iShares Ethereum Trust (ETHA) as a spot-only product, instead launched a separate fund, the iShares Staked Ethereum Trust (ETHB), on Nasdaq on March 12, 2026 with $107 million in seed capital. ETHB stakes between 70% and 95% of its ETH through Coinbase Prime and distributes rewards monthly; after Coinbase’s cut and BlackRock’s 0.25% sponsor fee, investors have been receiving roughly 82% of gross rewards, working out to a net yield in the range of 1.9% to 2.2%. Grayscale’s ETHE added staking earlier still, in October 2025, and the REX-Osprey ETH + Staking ETF also predates BlackRock’s entry.
Network-wide, Ethereum staking activity has continued to grow through the summer. As of August 17, 2026, more than 42 million ETH was staked, representing roughly 35% of total supply, with a staking annual percentage rate near 3.12% and a queue wait time of under 38 hours to begin staking.
What has to happen before shareholders see any yield
It is worth being precise about how far this filing still has to travel. An S-3/A amendment is a formal request to change what a registered fund is permitted to do; it is not itself a green light, and Fidelity explicitly cannot begin staking FETH’s ETH, nor make any distribution, until the SEC declares the amended registration effective. That review process can involve further rounds of comment and revision, and there is no guaranteed timeline for when, or whether, the amendment clears in its current form. Investors reading headlines about the filing should distinguish between “Fidelity has proposed to add staking” and “FETH is now earning and distributing staking rewards,” since only the first is true as of the filing date, and the gap between the two can run to months.
Why it matters for Canadian ETH holders
Canadians who hold ether exposure through Toronto Stock Exchange-listed spot ETFs already have staking built into several products, since Canadian issuers were staking ETH holdings well before their US counterparts were permitted to. Fidelity’s filing is a sign that the regulatory gap between the two markets is narrowing, and that the largest US Ethereum funds by assets are moving to compete with Canadian and existing staked products on total return, not just spot price exposure. If the SEC declares Fidelity’s amendment effective, FETH would become one of the largest ETH funds globally to offer staking income to shareholders, which could pull further institutional flows into staked ETH products on both sides of the border. For Canadian investors comparing options across both markets, the relevant variables to weigh once any new staked product goes live are the same ones that already differentiate existing TSX-listed and US staking-enabled funds: the percentage of holdings actually staked at a given time, the total fee taken before distribution, and whether rewards are paid out as cash or simply reflected in a rising net asset value.