Fidelity files to launch first U.S. Ethereum ETF with staking rewards

Fidelity Investment Management filed a proposal with the U.S. Securities and Exchange Commission to allow its new Ethereum exchange‑traded fund (ETF), ticker FETH, to stake all of its holdings and distribute the staking rewards to investors as quarterly cash payments. The filing, submitted on Tuesday, marks the first time a major asset manager has offered a fully staked crypto ETF in the United States.

Staking is the process of locking up cryptocurrency in a network to support its operations and earn a share of the network’s rewards. For Ethereum, staking pays out interest‑like rewards that can boost the fund’s yield. The move comes as the SEC has been cautious about approving crypto products, but investors and regulators alike are watching how to combine traditional fund structures with the new economics of blockchain. Fidelity’s proposal follows a wave of crypto‑asset ETFs that have gained traction in Europe and Canada, and it aims to give U.S. investors a regulated way to benefit from Ethereum’s staking upside.

Under the proposal, FETH would stake up to 100 % of its Ethereum holdings, generating rewards that are expected to average around 5 % to 6 % per year, depending on network conditions. Those rewards would be paid out to shareholders each quarter in cash, rather than reinvested. Fidelity says the cash payouts would be tax‑efficient for investors and could improve the fund’s net asset value relative to other Ethereum products that simply track the spot price. The firm is also preparing a detailed risk disclosure, noting that staking involves smart‑contract risk and that reward rates can fluctuate.

The SEC has a 60‑day review period for ETF proposals, so a decision is likely by the end of August. If approved, FETH would become the first U.S. ETF to offer fully staked Ethereum, potentially setting a new standard for crypto funds. Investors who wait for the outcome will be watching whether other asset managers follow suit, which could expand the range of regulated crypto products and make staking rewards more accessible to a wider audience.