Fidelity is charging ahead with plans to add staking capabilities to its Ethereum ETF. The financial giant’s proposal, filed through Cboe BZX Exchange with the SEC on March 11, 2025, aims to juice up returns for investors in its Fidelity Ethereum Fund (FETH). About time, right? The current ETH staking landscape yields approximately 3.3% APR—money that FETH holders are currently missing out on completely.
The proposal represents a significant shift in strategy. Fidelity plans to stake ETH through trusted providers while maintaining enough liquidity for redemptions. No small feat considering 28% of all ETH is already locked up in staking. Lido dominates this space with a whopping 28% market share of staked ETH. They’re the big fish in an increasingly crowded pond. This latest filing marks Fidelity’s second attempt at securing staking approval from the SEC.
Timing couldn’t be better. The new U.S. administration has taken a friendlier stance toward crypto, and the SEC seems to be warming up to the idea. Commissioner Hester Peirce has been particularly vocal in supporting staking-enabled ETFs. The days of the SEC throwing cold water on every crypto innovation might be numbered.
For investors, the benefits are clear. Enhanced returns through staking rewards. Passive income without the headache of direct ETH ownership. Unlike traditional ETFs, crypto ETFs typically charge higher fees due to additional custody and security costs. Let the professionals handle the technical mumbo-jumbo. What’s not to like?
The move could shake up the entire ETH ETF landscape. Grayscale and 21Shares are already nipping at Fidelity’s heels with their own staking proposals. Competition breeds innovation—and potentially better returns for everyone.
But it’s not all sunshine and rainbows. SEC approval remains uncertain. There are legitimate concerns about liquidity given ETH lock-up periods. And let’s not forget those pesky slashing penalties if validators misbehave.
Globally, this is old news. ETFs in Switzerland and Canada already offer staking, with varying models for distributing rewards. VanEck stakes about 65% of its ETH holdings overseas. America, playing catch-up again. Typical.
With approximately 2.5 million ETH valued at $7-8 billion currently held in ETFs, any approval of staking initiatives could significantly impact Ethereum’s price as this substantial amount would be removed from circulation.
