Fidelity Ethereum and Solana funds can now stake up to 100% of their crypto holdings, Fidelity Investments announced.
These plans, detailed in new prospectuses filed on August 21, 2026, come with a critical caveat: a comprehensive, multi-layered strategy designed to manage potential redemption delays that could impact investors.
Fidelity Ethereum Solana institutional staking
This move positions Fidelity’s exchange-traded products (ETPs) to maximize yield from their digital assets, a significant development in the institutional adoption of cryptocurrency. But it also highlights the inherent liquidity challenges within proof-of-stake networks, which Fidelity aims to address with transparent, albeit discretionary, risk mitigation measures.
The prospectuses for FETH and FSOL clearly outline the funds’ ability to stake all of their crypto assets under normal market conditions. This marks a notable expansion of offerings from a financial giant that manages trillions of dollars in assets.
Crucially, neither fund carries a minimum staking requirement, offering flexibility. FD Funds Management, the sponsor, maintains the discretion to keep Ether or SOL unstaked. This unstaked portion serves various purposes, including anticipating redemptions, covering expenses, ensuring asset protection, and supporting the fund’s liquidity program.
While the 100% figure represents an authorized ceiling, it doesn’t mean both funds are fully staked right now. As of June 30, 2026, the Fidelity Solana Fund had an impressive 99.64% of its Solana holdings staked. That translated to 1,675,797 SOL out of 1,687,589 SOL held, with a fair value of $126.3 million.
The Fidelity Ethereum Fund, on the other hand, was at a different stage. Its June 30, 2026 report listed 476,311 Ether and $758.609 million in net assets but didn’t disclose any currently staked amount. Fidelity had amended FETH’s trust and custody arrangements in August, with staking expected to commence as soon as practicable after August 21, 2026.
Navigating the redemption delay risks
One of the most critical aspects of these new staking plans is Fidelity’s detailed approach to managing potential redemption delays. Unstaking cryptocurrency from a proof-of-stake network isn’t instantaneous, and the prospectuses address this head-on with a structured “redemption ladder.”
The initial buffer comes from unstaked asset reserves. If these reserves prove insufficient and unstaking cannot be completed within the typical settlement window, the sponsor may temporarily extend the settlement period. This offers a crucial grace period for the fund to liquidate its staked positions.
Should an exit still not be feasible within a reasonable extended timeframe, the fund has another discretionary option: delivering cash-in-lieu. This means investors might receive cash instead of some or all of the crypto owed in an in-kind redemption. It’s important to note that these are discretionary tools for the fund, not automatic guarantees for investors.
The timing risks vary significantly between the two networks involved. The Fidelity Solana Fund generally expects to regain full control of its staked SOL within approximately two days under normal circumstances, though this isn’t a guaranteed outcome. Ethereum’s Proof-of-Stake mechanism, however, presents a different scenario.
FETH gives no fixed duration for regaining control of staked Ether. Ethereum validators must first leave the active set and then undergo a mandatory waiting period before the network’s withdrawal sweep processes their requests. Any substantial increase in exit demand or significant network disruption could easily prolong these timelines for either fund, adding a layer of uncertainty for redemptions.
Staking rewards and fee structures
The economic model underpinning these staking activities involves a clear division of rewards. Each trust will pay aggregate staking fees equivalent to 15% of the gross rewards generated. This 15% fee is allocated among the Sponsor, the custodians—which include Anchorage Digital, BitGo, and Fidelity Digital Assets—and the node operators responsible for validating transactions.
The remaining 85% of staking rewards will accrue directly to the funds. This substantial retained share is earmarked for several vital purposes. It can fund trust expenses, facilitate quarterly cash distributions to investors, cover redemptions, and even allow for additional staking to compound returns. The sponsor, however, retains the flexibility to alter this priority order as needed.
Fidelity has indicated plans to convert these staking rewards into cash, then distribute the proceeds to investors as quarterly payments. However, the exact amount and timing of these distributions are not guaranteed, reflecting the inherent volatility and operational specifics of the crypto market.
It’s worth noting that Fidelity waived the fee on staking rewards for FSOL through May 18, 2026, on its initial $1 billion in assets, before the standard 15% fee took effect.
Broader implications for crypto ETFs
Fidelity’s move to enable substantial staking for its FETH and FSOL funds underscores a growing trend within the broader financial industry. Traditional asset managers are increasingly seeking ways to integrate digital assets into familiar investment vehicles like ETFs, pushing for features that mirror the underlying asset’s native capabilities.
This development comes against the backdrop of an evolving regulatory landscape. The U.S. Securities and Exchange Commission (SEC) has gradually warmed to crypto ETFs, famously approving 11 spot Bitcoin ETFs in January 2024. These approvals paved the way for more sophisticated products, and staking functionality represents a natural progression for proof-of-stake assets.
But with expanded functionality come expanded risks. Staking introduces new layers of complexity, including liquidity constraints and the potential for “slashing” – a penalty where a portion of staked crypto is forfeited due to validator misbehavior. Investors in these funds aren’t just exposed to Ether or Solana price volatility; they also bear operational, regulatory, and staking-specific risks, with the potential to lose their entire investment.
It’s crucial for investors to understand that these trusts are not registered under the Investment Company Act, nor are they commodity pools. Consequently, their assets and staking positions lack the protection offered by FDIC or SIPC insurance, common safeguards in traditional finance. This distinction highlights the unique risk profile inherent in institutional crypto products.
Future liquidity solutions and market outlook
Looking ahead, Fidelity has outlined several potential future backstops to enhance liquidity management, though none were in place as of August 21, 2026. These include establishing a credit facility with the sponsor or an affiliate, exploring direct borrowing of digital assets, and even the sale or transfer of validator positions. Such mechanisms would provide additional flexibility during periods of high redemption demand.
The firm is also considering structures involving liquid staking tokens (LSTs) or tradable rights to staked assets. LSTs, which represent staked tokens and can be traded, could offer a more immediate liquidity solution for staked positions. However, implementing many of these advanced mechanisms would likely depend on further legal, tax, or exchange-rule changes, reflecting the nascent stage of the institutional crypto market.
This evolution in Fidelity’s offerings signifies a broader shift. As institutional players delve deeper into digital assets, they’re not just providing exposure but actively seeking to optimize returns through native blockchain mechanisms like staking. This integration, while promising for yield generation, inextricably links traditional finance with the unique operational and regulatory challenges of decentralized networks.
The move by Fidelity, a company that managed $7.0 trillion in assets as of March 2026, suggests growing confidence in the long-term viability of staking as an investment strategy. It also reflects increasing demand from institutional clients for products that capture the full economic potential of broader cryptocurrency market assets beyond simple price appreciation.
However, careful consideration of the inherent risks, particularly liquidity and regulatory uncertainties, remains paramount for any investor.