Fidelity Expands ETH Staking for $898M Fund
Fidelity is expanding its Ethereum investment options for the $898 million Fidelity Ethereum Fund (FETH). The fund will now allow investors to earn staking income on their Ethereum holdings, with quarterly cash distributions. This means that eligible FETH investors can expect to receive a portion of the rewards generated by staking, although there are some caveats.
The amount of Ethereum committed to staking will be flexible, with no minimum required and a permitted allocation that could reach the fund's entire Ethereum position under normal conditions. However, Fidelity will keep enough ETH unstaked to cover liquidity requirements, including investor redemptions and fund costs.
The staking rewards will be split before expenses are accounted for, with 85% going to FETH and the remaining 15% allocated to the sponsor, custodians, and node operators. The fund's share of those rewards will then be applied toward its expenses, with any amount left over being paid out as a quarterly cash distribution.
Fidelity has emphasized that it can liquidate part of its ETH holdings if cash is needed to make these scheduled distributions.