Fidelity's FETH Adds Staking to Distribute Quarterly Cash Rewards

Fidelity is updating its Ethereum ETF (FETH) to include staking as a feature that can distribute cash rewards to investors quarterly. The fund currently manages approximately $898 million in net assets, and under normal market conditions, it will have the flexibility to stake up to 100% of its held tokens.

The economics of this new model are straightforward: FETH will retain 85% of gross staking income, while the remaining 15% will be allocated to the sponsor, custodians, and validator node operators. However, net income will not be automatically distributed to investors in full; instead, it will first be used to cover the fund's operating expenses, with any surplus paid out in cash on a quarterly basis.

While Fidelity has not set a minimum percentage for staked assets, the size of the staked position will depend on FETH's need to maintain adequate liquidity. This balance is vital for the ETF structure, as the fund must remain capable of servicing share creations, redemptions, and ongoing costs.