Fidelity is preparing to add staking to its Ethereum ETF, giving investors a way to receive part of the rewards generated by the fund’s ETH holdings. The Fidelity Ethereum Fund has about $898 million in net assets, according to the figures provided, and its proposed structure would allow the fund to stake as much as 100% of its ETH, while keeping enough liquid to meet redemptions and expenses.
Under the proposed arrangement, investors would receive 85% of gross staking rewards, with the remaining 15% going toward the sponsor, custodians and node operators. After fund expenses are paid, the remaining rewards would be distributed to shareholders in cash each quarter.
NEW: 🇺🇸 Fidelity, a $7 trillion asset manager, will enable staking and quarterly cash payouts for its spot Ethereum ETF.
Ethereum ETF holders could soon earn additional income from their $ETH holdings. pic.twitter.com/k4n1Ii2kh4
— Crypto Jargon (@Crypto_Jargon) August 12, 2026
Staking could make ETH ETFs compete on income, not just price
The change matters because an ETH ETF can potentially generate an additional return stream without requiring investors to hold and stake ether themselves. Fidelity’s filing says staking rewards could allow the fund to outperform the Ethereum reference index before expenses, although the actual return will depend on staking participation, network conditions and reward rates.
The structure is also becoming more common among Ethereum investment products. Grayscale’s Ethereum staking ETF has already been making cash distributions, while BlackRock’s iShares Staked Ethereum Trust made its first distribution of $351,669.96 in June 2026.
What is changing in the Ethereum ETF market
Ethereum’s position in the ETF market is still much smaller than Bitcoin’s, but the gap is becoming more informative than the headline asset totals. Recent U.S. flows show that institutional demand is increasingly being directed toward both assets rather than Bitcoin alone.
In the week ending August 7, Bitcoin and Ethereum ETFs attracted a combined $1.1 billion, their strongest weekly inflow since April, while BlackRock’s Bitcoin and Ethereum funds accounted for about $896 million of that total. Investors are not treating ETH simply as a smaller version of BTC; they are increasingly using regulated funds to build exposure to two different parts of the crypto market.
Galaxy initially estimated that Ethereum ETFs could attract roughly 20%–50% of Bitcoin ETF flows during their first five months, showing the smaller addressable market and different investment proposition. The market is also becoming more competitive as issuers fight for assets through scale, pricing and product design. BlackRock’s ETHA has become the leading U.S. Ethereum ETF, while higher-cost funds have struggled to retain assets, creating pressure for issuers to reduce fees or offer something that justifies them.
At the same time, regulatory changes are making the market more flexible as the SEC approved in-kind creations and redemptions for crypto ETPs in July 2025, reducing some of the structural friction around these products.
Meanwhile, Fidelity has projected that nearly half of Bitcoin’s circulating supply could become illiquid within the next decade, a development that may significantly impact market dynamics and price outlooks.
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