Fidelity cryptocurrency ETF staking expansion

Fidelity Investments has moved to incorporate staking capabilities into its cryptocurrency exchange-traded products. Initially, the firm filed an amended registration statement with the U.S. Securities and Exchange Commission (SEC) to allow its $898 million Fidelity Ethereum Fund (FETH) to stake up to 100% of its ETH holdings. This proposal included plans to distribute net staking rewards to shareholders via quarterly cash payments, with 85% of gross rewards retained by the fund and 15% allocated to sponsors, custodians, and node operators.

Following these developments, Fidelity updated prospectuses for both the Fidelity Ethereum Fund (FETH) and the Fidelity Solana Fund (FSOL), granting both products the authority to stake up to 100% of their underlying assets. While the 100% figure represents a maximum ceiling, there is no minimum requirement, allowing the sponsor, FD Funds Management, to keep assets unstaked to manage liquidity and redemptions. To address potential network exit delays, the funds established a layered redemption framework that may allow for extended settlements or cash payments in lieu of cryptocurrency. As of June 30, the FSOL fund reported that 99.64% of its assets were staked.