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US investment giant Fidelity is planning staking and quarterly cash payments for its spot Ethereum ETF, FETH.
According to CoinDesk, Fidelity is preparing to introduce staking features to its spot Ethereum ETF, FETH, which has a value of approximately $898 million. With this new arrangement, the fund plans to distribute staking revenue to investors as regular cash payments.
According to Fidelity’s filing with the SEC, FETH will be able to stake up to 100% of its Ethereum holdings under normal market conditions. However, the fund will not have a specific minimum staking percentage.
In addition, Fidelity may hold a portion of its Ethereum assets without staking them in order to meet investor buyback requests, finance operational expenses, and manage other liquidity needs.
Furthermore, 85% of the gross staking rewards earned under the new system will be held by FETH. The remaining 15% will be shared among the fund sponsor, custody service providers, and node operators performing the staking operations. Blockdaemon, Figment, and Galaxy have been identified as the node operators.
Fidelity recently stated that its plan is to cover fund expenses before staking income, and that the remaining net staking income after deducting expenses will be distributed to investors as cash payments at least every three months. Fidelity also indicated that it may sell $ETH to finance payments to investors if necessary.
Ethereum ETF Competition Heats Up in the US!
Fidelity’s move demonstrates the increasing importance of staking in the Ethereum ETF market in the US.
While Grayscale and 21Shares had previously taken steps to add staking features to their existing Ethereum funds, BlackRock took a different approach by launching a separate $ETH ETF staking product.
*This is not investment advice.