Fidelity’s $898 Million Ethereum Fund Plans ETH Staking, Quarterly Cash Distributions

Fidelity is preparing to let its $898 million Fidelity Ethereum Fund (FETH) generate staking income from the Ethereum it holds, with eligible proceeds set to be paid out to investors every quarter.

The fund will have flexibility over how much ETH it commits to staking. There is no required minimum, while its permitted allocation can reach its entire Ethereum position under normal conditions. Fidelity will keep enough ETH unstaked to handle liquidity requirements, including investor redemptions and fund costs.

Staking proceeds will be split before expenses are accounted for. FETH will receive 85% of the gross rewards generated, with the remaining 15% allocated to the sponsor, custodians, and node operators.

The fund’s share of those rewards will then be applied toward its expenses. Any amount left after those costs are covered is expected to be paid to investors as a quarterly cash distribution. 

FETH can liquidate part of its ETH holdings if cash is needed to make the scheduled distributions.

Source: Fidelity (S-3/A Amendment Filing)