American investment giant Fidelity plans to implement staking and quarterly cash distributions for its spot Ethereum ETF, FETH.
According to CoinDesk, Fidelity is preparing to introduce staking for its spot Ethereum ETF, FETH, valued at approximately $898 million. As part of this new agreement, the fund plans to distribute staking revenue to investors in the form of regular cash payments.
According to documents filed by Fidelity with the U.S. Securities and Exchange Commission (SEC), FETH will be able to stake up to 100% of its assets in Ethereum under normal market conditions. However, no specific minimum staking percentage will be set for the fund.
Furthermore, Fidelity may keep a portion of its Ethereum assets unstaked to meet investor redemption requests, fund operational expenses, and meet other liquidity needs.
Additionally, 85% of the gross staking rewards earned under the new system will be held within FETH. The remaining 15% will be distributed among the fund's sponsor, custodial service providers, and the node operators performing the staking operations. Blockdaemon, Figment, and Galaxy have been chosen as the node operators.
Fidelity recently stated that it plans to cover fund expenses prior to the deduction of staking income, with the remaining net staking income after expenses being distributed to investors as cash payments at least every three months. Fidelity also indicated it may, if necessary, sell $ETH to fund investor distributions.
Competition Heats Up Among Ethereum-Based ETFs in the US!
Fidelity's actions highlight the growing importance of staking in the U.S. Ethereum ETF market.
While Grayscale and 21Shares have previously taken steps to add staking features to their existing Ethereum funds, BlackRock has chosen a different approach by launching a separate $ETH ETF product specifically for staking.
*This is not investment advice.
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