Fidelity Prepares Yield-Generating Ethereum ETF

Fidelity is planning to transform its Fidelity Ethereum Fund (FETH) into an investment product that generates yields. The company has submitted an amended registration statement with the U.S. SEC, seeking permission to stake up to 100% of the fund's ETH holdings and distribute any resulting net rewards to shareholders quarterly.

FETH currently holds around $898 million in net assets. Under normal conditions, Fidelity could stake nearly all its ETH while keeping enough available for redemptions, expenses, and other liquidity needs. The proposed reward structure is straightforward: 85% of gross staking rewards would go to FETH, while the remaining 15% would be shared among Fidelity, custodians, and staking operators as fees.

Net rewards would first cover fund expenses. Any amount left could be distributed to investors in cash quarterly. However, payouts are not guaranteed, and the fund may sell ETH to generate cash for distributions.