- Fidelity has filed to unlock staking rewards from its Ethereum ETF offering.
- The company plans to distribute 85% of the product’s staking rewards to investors quarterly.
Fidelity Investments, one of the world’s largest financial institutions, has upped the ante on its Ethereum (ETH) exchange-traded fund (ETF) offering. It filed a proposal on Tuesday to add a staking feature to the Fidelity Ethereum Fund (FETH), which, if approved by the US Securities and Exchange Commission (SEC), will unlock more ways for investors to earn from it.
Fidelity’s Filing for Ethereum ETF Staking
Fidelity proposed staking up to 100% of its Ethereum ETF across selected regulated institutional staking partners and node operators. It noted that there will be no minimum requirement on the asset that it can stake.
Under the company’s Ether ETF staking framework, it will collect a flat 15% of the reward the Trust earns from the program. It will then use the fees to pay node operators, custodians, and the ETF’s sponsor, FD Funds Management, LLC (FDF). Also known as Fidelity Digital Assets, FDF is a Fidelity subsidiary dedicated to managing and overseeing the financial institution’s suite of digital asset investment products.
Meanwhile, the Trust will retain the remaining 85% of the staking rewards. Fidelity plans to distribute these to shareholders through a quarterly payout.
Thomas “Tom” Lee, Chairman of Bitmine Immersion Technologies, believes the new feature will attract yield-oriented investors into Ethereum ETFs. Their company currently holds the largest Ether reserve, with over 5.8 million ETH in its balance sheet.
The SEC’s approval would generate a positive feedback loop for Ether and digital asset treasury companies like Bitmine, creating a self-reinforcing financial flywheel spanning spot markets, institutional investment vehicles, and corporate treasury balance sheets.
Adding native staking yields to Ethereum ETFs generally transforms them from passive price-tracking investment vehicles into cash-generating assets. It would amplify investors’ earning potential, especially if timed with market tailwinds in Ethereum or the broader crypto market.
For FETH, it would give it a competitive edge against traditional fixed-income instruments and dividend-paying equities.
FETH Market Performance
FETH is Fidelity’s second-largest crypto investment vehicle, with $2.133 billion in total net inflows as of Wednesday. It’s next to its successful Bitcoin (BTC) ETF, the Fidelity Wise Origin Bitcoin Fund (FBTC), with $10.001 billion in aggregate net inflows over the same period.
Fidelity has notably trailed BlackRock in Bitcoin and Ethereum ETFs, albeit with a huge gap in their numbers. The world’s largest asset manager maintains $61.171 billion and $11.626 billion in total net inflows from these investment instruments, respectively.
