Fidelity's Ethereum ETF Sets New Standard for Staking ETPs

When it comes to Ethereum staking, investors in Germany have two options: they can either stake their own ETH directly or use an exchange-traded product (ETP). Fidelity has recently filed with the US Securities and Exchange Commission for its ether ETF, which plans to stake up to 100% of its holdings and distribute the proceeds quarterly in cash.

This is a significant development, as most staking ETPs currently available on European markets keep the yield inside the product. The filing comes after a safe harbour bulletin from the US tax authority allowed qualified crypto trusts to stake without losing their tax status as a grantor trust.

But what exactly happens to the staking proceeds? With an accumulating product, the yield stays within the vehicle and increases the holding's value. In contrast, a distributing product pays out the yields in cash, forcing investors to decide whether they want to reinvest or hold onto the money.