Coinspeaker
1 hour ago
Bullish

Fidelity seeks SEC approval to add staking to its Ethereum ETF

3 min

FD Funds Management LLC, sponsor of the Fidelity Crypto Ethereum Fund (FETH), filed a pre-effective amendment to its Form S-3 with the U.S. SEC on July 24, 2026, adding explicit disclosure that would allow the fund to stake up to 100% of its ether holdings. The amendment registers no new securities and updates an S-1 the SEC declared effective on July 31, 2025. The filing positions staking as an activity expected to begin once the registration statement becomes effective.

What Fidelity’s Amendment Enables

The prospectus describes staking through custodians and node operators under normal conditions, while reserving ETH for redemptions, expenses, and liquidity management under a Liquidity Program.

Economic terms: the Trust would retain 85% of gross staking rewards. A 15% Staking Fee goes to the Sponsor, custodians, and node operators. This is in addition to the 0.25% annual Sponsor fee on Ether holdings.

Custodians named: Anchorage Digital Bank NA, BitGo Bank & Trust, and Fidelity Digital Assets, N.A. The filing details staking risks: slashing, transfer restrictions during activation and exit, and potential delays. The Sponsor may extend redemption settlement timelines or pay redemptions in cash to manage these constraints.

Regulatory Status and Mechanics

An S-3 provides capacity for future share issuance but does not itself authorize new activities. The filing is preliminary. Shares may not be sold until the registration statement becomes effective, and staking is expected to begin as soon as practicable after effectiveness. Fidelity is establishing disclosure and operational frameworks now to move quickly upon SEC clearance.

Investor Implications

FETH plans quarterly cash distributions funded by net staking rewards. The prospectus states distributions are not guaranteed and may be modified or suspended. This contrasts with direct on-chain ETH staking, where rewards accrue continuously without ETF-level fees and liquidity programs. The filing highlights operational protections and trade-offs: staking yield minus a 15% staking fee and a 0.25% sponsor fee, custodial diversification, and potential redemption timing adjustments to mitigate staking lockups and slashing risk.