Fidelity to Add Ethereum Staking, Quarterly Payouts to $898M Fund

Fidelity Investments is moving to introduce Ethereum staking and quarterly cash distributions to its Fidelity Ethereum Fund, a significant expansion for the nearly $900 million cryptocurrency investment vehicle. The firm filed an amended registration statement with the U.S. Securities and Exchange Commission on August 11, outlining a plan to stake up to 100% of the fund's ether holdings under normal market conditions.

The proposed structure would allow the fund, which holds $898 million in net assets, to earn rewards from the proof-of-stake network. Under the plan, Fidelity would retain 85% of gross staking rewards, with the remaining 15% allocated to the fund's sponsor, custodians, and node operators. Net rewards would first be used to cover fund expenses before being distributed to shareholders as quarterly cash payments. Fidelity intends to begin staking as soon as practicable after the prospectus takes effect.

The filing specifies that the fund would maintain sufficient ether outside of staking to meet redemption requests, fund expenses, and other liquidity needs. The firm has named Blockdaemon, Figment, and Galaxy Digital Trading Cayman as its intended node operators, with...