Ethereum (ETH): Fidelity Plans Staking for $898M ETF

Ethereum News

Fidelity is moving to add staking and quarterly cash distributions to its $898 million Fidelity Ethereum Fund, placing Ethereum (ETH) yield inside a regulated fund wrapper. Staking, the process of locking ETH to secure the network for rewards, is the yield mechanism involved. The proposal covers the fund ticker FETH and would allow the product to stake up to 100% of its ether holdings under normal conditions, while keeping enough unstaked assets for redemptions, fees and liquidity needs. The structure is notable because similar Ether funds have generally held the asset without generating protocol rewards, leaving investors exposed only to price changes. If implemented, the fund would retain 85% of total staking rewards and pay 15% to the sponsor, custodian and node operators. Net rewards would first cover fund expenses, with any remainder distributed to shareholders in cash each quarter. The issuer may also sell a portion of ETH if reward cash is insufficient, a detail that separates this design from simple pass-through staking. For altcoin investors, the move reframes ETH as a cash-flowing asset rather than a purely speculative position, though it does not remove market risk. Staking inside an ETF also changes the investor’s relationship with the network: holders receive economic exposure through a fund, not direct validator keys. The proposal arrives as asset managers search for product differentiation after the first wave of spot crypto funds. Whether the added yield can justify fees will depend on reward rates, fund expenses and regulatory acceptance. With net assets near $898 million, the vehicle offers a sizable live test of whether traditional investors will accept on-chain yield inside a familiar fund structure. It also raises operational questions about slashing, node reliability and custody controls, which the fund’s disclosures will need to define clearly. Still, a $898 million product adding staking is one of the clearest signs that institutional Ethereum products are shifting from passive holding toward active network participation.

Bank Leumi, Israel’s largest and oldest commercial bank, is advancing a Galaxy Digital partnership that would give retail clients access to Bitcoin, Ethereum and Solana trading inside the Leumi Trade app. The service is planned for early 2027 and remains subject to approval by the Bank of Israel, a condition that previously blocked the lender’s 2022 Paxos effort. Under the proposed setup, customers would not open accounts on external exchanges or manage personal wallets; instead, they would buy, hold and sell selected digital assets alongside stocks and bonds in a separate section of the investment platform. Galaxy would supply trading and custody technology through its institutional business, while Leumi would operate the custody layer under its own name using Galaxy’s GK8 platform, originally acquired from Celsius Network’s bankruptcy for about $44 million in 2023. That design places the compliance relationship between the client and the bank, not an offshore intermediary, but it is not self-custody. Users would not control private keys, and the assets would not carry the same deposit insurance as shekel balances. Because clients will not hold keys themselves, the structure avoids consumer-wallet practices such as blind signing, relying instead on bank-controlled custody processes. The announcement also lands against a changing regulatory backdrop. Israeli banking regulators drafted rules in mid-2026 that could treat some transfers from licensed virtual-asset providers as lower-risk transactions, while the capital markets authority has outlined capital, segregation and cybersecurity requirements for licensed crypto firms. Those changes may reduce the long-standing friction around bank-linked crypto on-ramps and off-ramps. Local adoption is significant: industry estimates say more than 25% of Israelis have used or held digital assets, and Chainalysis estimated $22 billion in on-chain value received in Israel during the 12 months through June 2025. Fees, trading limits and the final asset list have not been disclosed. The move could pressure Bank Hapoalim, Mizrahi-Tefahot and Bank Discount to respond, though none had announced a comparable retail crypto service by mid-August.

COINOTAG’s analysis is that these developments frame Ethereum less as a speculative token and more as regulated financial infrastructure. The bank’s official announcement states the planned service is awaiting central-bank approval and will use Galaxy custody, while the fund proposal states staking rewards will first cover expenses before quarterly cash payments. That combination points to Ethereum being integrated into traditional distribution channels, even if investors do not control keys. The outcome does not depend on a new all-time high or escape from a bear market. It depends on approvals, custody security and whether regulated yield products can attract long-term capital.