Fidelity Investments filed a pre-effective amendment with the U.S. Securities and Exchange Commission on August 11, 2026, disclosing that its Fidelity Ethereum Fund (FETH) intends to stake up to 100% of the fund's ether holdings under normal market conditions. FETH held approximately $898 million...
Fidelity Investments filed a pre-effective amendment with the U.S. Securities and Exchange Commission on August 11, 2026, disclosing that its Fidelity Ethereum Fund (FETH) intends to stake up to 100% of the fund's ether holdings under normal market conditions. FETH held approximately $898 million in net assets at the time of the filing. The fund would retain 85% of gross staking rewards, with the remaining 15% split among Fidelity's sponsor entity, custodians, and three node operators — Blockdaemon, Figment, and Galaxy Digital. Net proceeds would be distributed to shareholders as quarterly cash payments.
The filing places Fidelity in direct competition with two live staking products — Grayscale's Ethereum Staking ETF (ETHE), operational since October 2025, and BlackRock's iShares Staked Ethereum Trust ETF (ETHB), live since March 12, 2026. It also puts pressure on at least four other issuers — Franklin Templeton, Invesco, 21Shares, and VanEck — whose staking amendments remain pending. As Ethereum's network-wide staking ratio hits a record 34% of supply, the institutional race to capture yield from the protocol's consensus layer is accelerating. At current gross staking yields of 3.1–3.3%, the fee structures embedded in each ETF wrapper determine the actual return passed to end investors, making this a competition fought in basis points.
Fidelity's pre-effective amendment to Form S-3, filed August 11, 2026, adds staking disclosure to FETH's prospectus. The key structural provisions, according to CoinDesk and the SEC filing:
The prospectus remains pre-effective. Fidelity cannot begin staking FETH's ether until the SEC formally declares the registration statement effective. No staking had commenced as of August 12, 2026, and no distributions are guaranteed, per the filing.
Two U.S. spot Ethereum ETFs currently support staking.
Grayscale Ethereum Staking ETF (ETHE): Grayscale activated staking for ETHE in October 2025, making it the first U.S. Ethereum ETP to stake holdings. On January 6, 2026, ETHE distributed $0.083178 per share to shareholders — proceeds from staking rewards earned between October 6, 2025, and December 31, 2025 — marking the first time a U.S. spot crypto ETP distributed staking rewards, according to a GlobeNewsWire release. ETHE had over $1.2 billion in managed tokens as of mid-2026. The fund amended its trust agreement in August 2026 to formalize distributions on a monthly (but no less than quarterly) basis. Its management fee is 0.15%.
BlackRock iShares Staked Ethereum Trust ETF (ETHB): BlackRock launched ETHB on March 12, 2026, with $107 million in seed capital and approximately 80% of that already staked on-chain at launch, according to CoinDesk. ETHB stakes between 70% and 95% of its holdings through validators operated by Coinbase Prime, Figment, Galaxy Digital, and Attestant. The fund charges a 0.25% sponsor fee with a temporary discount to 0.12% on the first $2.5 billion in assets. ETHB distributes 82% of gross rewards on a monthly basis.
The SEC and CFTC issued a joint interpretive release on March 17, 2026, explicitly stating that protocol staking of non-security digital commodities — including ETH — does not trigger Securities Act registration requirements. This ruling cleared the regulatory pathway for staking within ETF wrappers.
At current gross Ethereum staking yields of 3.1–3.3% annually (per KuCoin's staking analysis), the fee structures embedded in each wrapper determine net investor yield. The following table compares disclosed terms:
| Fund | Ticker | Sponsor Fee | Staking Fee (off gross) | Estimated Net Yield* | Distribution | |------|--------|-------------|------------------------|---------------------|--------------| | Grayscale Ethereum Staking ETF | ETHE | 0.15% | Not separately disclosed | ~2.4–2.6% | Monthly/Quarterly | | BlackRock iShares Staked Ethereum Trust | ETHB | 0.25% (0.12% promo) | 18% of gross rewards | ~2.1–2.5% | Monthly | | Fidelity Ethereum Fund (pending) | FETH | TBD | 15% of gross rewards | ~2.2–2.6% (est.) | Quarterly |
*Estimated net yields assume 3.1–3.3% gross staking APR, adjusted for disclosed fees. Actual yields depend on staking ratio, MEV rewards, and fund expenses.
A critical structural difference: Fidelity proposes staking up to 100% of holdings, compared to BlackRock's 70–95% range. If Fidelity stakes a higher percentage of its ether, it could generate marginally higher gross yield per unit of AUM, partially offsetting fee disadvantages. However, higher staking percentages also reduce liquidity buffers available for shareholder redemptions.
At least four additional issuers have filed staking amendments that remain pending with the SEC: Franklin Templeton, Invesco, 21Shares, and VanEck. These were initially expected to clear final review windows in Q2 2026, but timelines have extended.
A notable dispute emerged over the approval process. According to DL News, VanEck, 21Shares, and Canary Capital formally urged the SEC to adopt a first-in, first-out process for staking approvals rather than bulk approval, arguing that batch processing "diminishes investor choice, compromises market efficiency, and fundamentally undermines the commission's mission." BlackRock's late filing reportedly renewed calls from these issuers for the SEC to reject bulk approval.
The SEC's approach to sequencing these approvals has implications for competitive dynamics. Grayscale's first-mover position generated measurable brand advantage: its January 2026 distribution was covered as an industry milestone. Each subsequent approval dilutes that advantage but expands the total addressable market for staking ETF products.
Ethereum's staking metrics provide context for the institutional yield being captured:
The inverse relationship between staking participation and yield is the central constraint. Each additional ETH staked dilutes per-validator rewards. Institutional inflows via ETF products contribute to this compression.
The long-term trajectory of ETH staking yields faces a structural challenge beyond dilution. On August 4, 2026, researchers including Ethereum Foundation's Justin Drake filed EIP-8361, a "tapered issuance burn" proposal. According to The Block, the proposal would reduce annual consensus yield from approximately 2.6% to 1.2% over an 18-month phase-in period at the current one-third staking ratio.
If adopted, EIP-8361 would roughly halve the yield available to staking ETFs. At a 1.2% gross yield, after fees of 15–18%, net investor returns would fall to approximately 1.0–1.02% — barely above U.S. Treasury bill rates and well below the current 2–2.6% net yield range. This would fundamentally alter the value proposition of staking ETFs as yield instruments and could redirect institutional capital toward non-staking ETH exposure or alternative yield sources.
The proposal remains in discussion. No timeline for implementation has been set. But the existence of EIP-8361 introduces downside risk to the yield assumptions underlying every staking ETF prospectus currently on file with the SEC.
Broader Ethereum ETF flow data provides demand context for staking products:
Ethereum ETFs beat Bitcoin ETF inflows for the first time in a recent month, with $365 million in net inflows, according to Crypto.news — a signal of institutional rotation toward ETH exposure. Staking yield is a plausible driver of this rotation, as Bitcoin ETFs offer no native protocol yield.
Fidelity's staking amendment transforms FETH from a passive spot ETH wrapper into a yield-bearing instrument competing directly with Grayscale and BlackRock on basis points. The competitive dynamics are straightforward: gross yield is set by the Ethereum protocol, leaving fee structure, staking ratio, and distribution frequency as the only levers issuers can pull. Fidelity's 100% staking capacity and 15% fee take represent an aggressive positioning relative to BlackRock's 70–95% range and 18% take.
The broader question is whether the yield itself will persist. With 34% of ETH supply already staked, yields are compressing under their own weight. EIP-8361, if implemented, would accelerate that compression substantially. Issuers racing to add staking are building products around a yield that may be structurally declining — a tension that prospectus risk disclosures acknowledge but marketing materials tend to understate.
For now, the race is measured in basis points and regulatory sequencing. Each approval expands the staking ETF category but dilutes the advantage of being first. The data shows institutional demand exists — $10.74 billion in total ETH ETF assets and rising inflows suggest that — but whether that demand is driven by ETH exposure or by staking yield specifically remains an open question that flow data alone cannot answer.