Fidelity Seeks SEC Approval for Ethereum Staking Rewards

Fidelity Investments has applied to the US Securities and Exchange Commission (SEC) for approval to add staking to its Ethereum ETF, FETH. The proposal would allow FETH holders to earn an additional return on investment by participating in Ethereum's proof-of-stake network.

Under normal circumstances, Fidelity may hold 100% of its eligible Ether staked in FETH, with the fund maintaining ETH holdings to cover redemptions, expenses, and liquidity requirements. The proposed change would take FETH away from the risks of being exposed to Ether price movements.

Fidelity plans to split staking rewards into 15% fees for staking infrastructure providers and 85% for the fund, with cash distributions made on a quarterly basis. However, there is no guarantee of payout or yield, as Ethereum's conditions of staking and the costs of the fund could alter investor returns.

The launch comes as the crypto ETF sector in the US continues to evolve, with FETH having seen about $2.13 billion in cumulative net inflows since its launch in July 2024.