Fidelity has restructured the operations of its Ethereum (ETH) and Solana (SOL) spot exchange-traded products (ETPs) to allow up to 100% of held digital assets to be staked. Investors will receive 85% of total rewards generated from staking.
According to CryptoSlate on the 24th (local time), the Fidelity Ethereum Fund (FETH) and Fidelity Solana Fund (FSOL) may now stake the entirety of their underlying assets under normal market conditions. The change was specified in registration documents filed with the U.S. Securities and Exchange Commission (SEC) on August 7.
Previously, the amount eligible for staking was capped at a certain percentage, but the revised structure removes that ceiling. However, no minimum staking ratio was separately established, and the funds retain the flexibility to hold some assets unstaked for redemption handling, expense payments, asset protection, and liquidity management.
Actual staking ratios differed between the two products. As of end-June, FSOL had staked 1,675,797 of its 1,687,589 held Solana tokens, achieving a staking ratio of 99.64% over the most recent 30-day period. In contrast, FETH held 476,311 Ethereum tokens at the same point but did not separately disclose its staked amount. Fidelity stated it modified its trust and custody structure in August and plans to begin staking as soon as possible after the 21st.
Liquidity management measures have also been put in place to address potential redemption delays caused by staking. The funds will first use unstaked reserve assets to meet redemption requests, and if unstaking is not completed within the standard settlement period, the settlement timeline may be temporarily extended. If digital assets remain unavailable thereafter, the funds may pay out partially or fully in cash instead of in-kind.
The staking reward allocation structure pays 15% of total rewards as related fees, with the remaining 85% accruing to the funds. These rewards may be used to cover fund expenses, quarterly cash distributions, redemptions, and additional staking. Fidelity has also proposed selling staking rewards to distribute quarterly cash payments to investors, though it noted that payment amounts and timing are not guaranteed. The 85% figure in the filing refers to total rewards before deductions, and actual yields will vary depending on network conditions and each fund’s staking ratio.
Additional liquidity tools are also under consideration. Fidelity has outlined credit facilities, digital asset borrowing, sale or transfer of validator positions, and the use of liquid staking tokens (LSTs). However, as of the 21st, neither product had entered into a credit facility agreement, and some options would require future changes to legal, tax, and exchange regulations.
The move comes amid intensifying competition among digital asset ETPs with staking capabilities. Staking-enabled ETPs differentiate themselves from non-staking products by offering investors additional yield opportunities. However, the withdrawal delay risk associated with staked assets remains a factor that could affect redemption structures. As the SEC strengthens its regulatory review of digital assets following ETF approvals, staking-enabled ETPs remain in an evolving regulatory landscape.
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