Fidelity Prepares Ethereum Staking for $900M Fund Amid Warning on Reduced Exposure

Fidelity is gearing up to introduce Ethereum staking for its FETH fund, which has nearly $900 million in net assets. The fund's amended registration statement indicates that it will stake up to 100% of its ETH holdings and retain 85% of the gross staking rewards.

The staking process involves Fidelity holding onto the private keys while chosen operators run Ethereum validators, including Blockdaemon, Figment, and Galaxy Digital Trading Cayman. The firm plans to convert eligible staking income into fiat and distribute it quarterly to shareholders.

Fidelity warns that funding cash distributions could reduce the fund's underlying ETH exposure, and selling rewards or current holdings of ETH may also be used to pay distributions. This would likely affect FETH's Net Asset Value (NAV) and share price.