Fidelity Seeks SEC Approval for Yield-Bearing Ethereum Fund

Fidelity has submitted a proposal to the SEC to transform its $898 million Ethereum Fund into a yield-bearing vehicle. The fund would stake up to 100% of its underlying ether holdings and distribute the proceeds as quarterly cash payments.

According to the filing, Fidelity plans to partner with node operators Blockdaemon, Figment, and Galaxy Digital Trading Cayman to manage the validator infrastructure required for staking. The custodians will retain control of the private keys while the node operators handle the technical aspects.

The proposed structure would see 85% of gross staking rewards retained by Fidelity and its partners, with the remaining 15% allocated among them. While no minimum staking amount has been specified, the fund aims to keep a portion of ETH available for redemptions, expenses, distributions, and other liquidity needs.

The net staking rewards would first cover sponsor fees and trust expenses before being distributed to shareholders in cash on a quarterly basis. Fidelity may sell some ether for U.S. dollars to fund these payouts, but the exact amount would depend on Ethereum staking yields, validator performance, network rules, slashing events, and other operating conditions.

The filing arrives nearly nine months after the Treasury Department and Internal Revenue Service issued Revenue Procedure 2025-31 in November 2025, which created a safe harbor for qualifying investment trusts holding digital assets to participate in staking without jeopardizing their grantor-trust tax status.