Fidelity’s latest FETH filing proposes allowing the fund to stake as much as 100% of its ether holdings, although staking cannot start until the SEC declares the registration statement effective.
FD Funds Management LLC, the sponsor of the Fidelity Crypto Ethereum Fund (FETH), submitted a pre-effective amendment to its Form S-3 registration statement with the U.S. Securities and Exchange Commission on July 24, 2026. The filing adds language that would permit the fund to stake up to its entire ETH portfolio.
The amendment also clarifies that it does not register any additional securities and updates an earlier S-1 registration statement that the SEC declared effective on July 31, 2025.
The move goes beyond a routine registration update. Fidelity is seeking to incorporate staking rewards into its spot Ethereum ETF, which launched without a staking feature. The filing indicates that staking would begin only after the registration statement takes effect rather than being an activity the fund is already conducting.
What Fidelity’s FETH Amendment Changes
Under the proposed structure, the fund would stake ether through custodians and node operators under normal conditions while keeping some ETH available for redemptions, expenses and liquidity needs through its Liquidity Program.
FETH would keep 85% of the gross rewards generated through staking. The remaining 15% would be paid as a staking fee and divided among Fidelity, the custodians and node operators. This would be in addition to the fund’s existing 0.25% annual sponsor fee on its ether holdings.
The filing names Anchorage Digital Bank NA, BitGo Bank & Trust and Fidelity Digital Assets, N.A. as custodians for the trust.
Fidelity also outlines the risks associated with staking, including potential slashing penalties and periods when staked ETH cannot immediately be transferred during activation or withdrawal. To manage liquidity challenges, the sponsor could extend redemption settlement periods or fulfill certain redemptions in cash.
Why the Staking Timing Matters
The S-3 registration provides the legal framework for future share issuance, but filing it does not automatically allow FETH to begin staking.
Because the registration statement is still preliminary, the prospectus states that shares cannot be sold until the SEC declares the registration effective. The document similarly describes staking as an activity Fidelity expects to begin as soon as reasonably practical after effectiveness, rather than something already taking place.
Fidelity appears to be establishing the necessary disclosures and operational structure ahead of time so FETH can potentially begin staking soon after SEC effectiveness instead of submitting the framework later.
The fund also plans to potentially make quarterly cash distributions from net staking rewards. However, Fidelity notes that such distributions are not guaranteed and could be changed or suspended.
That distinction is important for investors comparing FETH with directly staking ETH. While direct staking already generates on-chain rewards, an ETF must account for additional custody, liquidity, regulatory and operational requirements before those rewards can be passed through to shareholders.
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