Fidelity Files Proposal for Full-Scale Staking in Ethereum ETF

Fidelity has amended its regulatory filing to allow its Fidelity Crypto Ethereum Fund (FETH) to potentially stake up to 100% of its ether holdings. However, the staking program cannot begin until the U.S. Securities and Exchange Commission (SEC) declares the registration statement effective.

FD Funds Management LLC, the sponsor of FETH, submitted a pre-effective amendment to its Form S-3 registration statement with the SEC on July 24, 2026. The amendment introduces provisions that would enable the fund to stake its entire ETH portfolio.

The filing does not register additional securities. Instead, it updates the fund’s existing registration framework, which was initially declared effective by the SEC on July 31, 2025.

Fidelity is essentially seeking to add staking capabilities to its spot Ethereum ETF, which launched without the feature. The filing states that FETH has not started staking and will only begin once the registration statement becomes effective.

FETH Staking Structure

Under the proposed arrangement, FETH would stake its ETH through custodians and node operators under normal market conditions. A portion of the fund’s holdings would remain available to meet redemptions, expenses and other liquidity needs through its Liquidity Program.

FETH would retain 85% of the gross staking rewards generated by its ETH, while the remaining 15% would be paid as a staking fee shared by Fidelity, its custodians and node operators. This fee would be separate from the fund’s existing 0.25% annual sponsor fee.

The filing names Anchorage Digital Bank NA, BitGo Bank & Trust and Fidelity Digital Assets, N.A. as FETH’s custodians.

Fidelity also highlights several risks associated with staking, including slashing penalties and restrictions on transferring ETH while assets are being activated or withdrawn from staking. If liquidity becomes constrained, the sponsor could extend redemption settlement times or meet redemptions in cash.

SEC Approval Still Needed

Submitting the S-3 does not automatically authorize FETH to begin staking. Since the registration statement remains pre-effective, Fidelity must wait for the SEC to declare it effective before implementing the program.

The company said it expects to begin staking “as soon as practicable” once the registration becomes effective, indicating that it is preparing the necessary regulatory and operational infrastructure ahead of a potential launch.

FETH also plans to distribute net staking rewards to investors through quarterly cash payments. However, the prospectus notes that such distributions are not guaranteed and may be modified or suspended.

The proposal underscores the additional complexities involved in offering staking through an Ethereum ETF compared with direct ETH staking. While individual stakers can already earn network rewards, an ETF must address additional regulatory, custody, liquidity and operational considerations before distributing those rewards to shareholders.