Fidelity lets Ethereum, Solana ETFs stake up to 100%

The prospectuses for the Fidelity Ethereum Fund (FETH) and Fidelity Solana Fund (FSOL), filed Aug. 21, authorize staking up to 100% of each trust’s holdings and impose no minimum staking requirement. The filings allow the sponsor, FD Funds Management, to keep some assets unstaked to meet foreseeable redemptions, cover expenses, protect assets and run a liquidity program.

FSOL’s quarterly report as of June 30 shows 1,675,797 SOL staked of 1,687,589 SOL held, a 30-day staked percentage of 99.64% and a fair value for staked assets of about $126.3 million. FSOL’s net assets at that date were $127.079 million. FETH’s June 30 report lists 476,311 ether and net assets of $758.609 million but does not report a staked-ether amount.

Fidelity amended trust and custody arrangements in August and indicated staking for FETH was expected to begin as soon as practicable after Aug. 21. The 100% figure in the prospectuses is a maximum authority and does not confirm that either fund is fully staked now.

The filings set out a multi-step process to handle redemptions when unstaking takes longer than normal settlement windows. The trusts will use cash reserves first. If reserves are insufficient and unstaking cannot be completed within the normal settlement window, the sponsor may temporarily extend settlement. If exits still cannot be completed within a reasonable extended period, the sponsor may deliver cash instead of crypto in an in-kind redemption. Those options are discretionary.

Timing risks differ by network. The FSOL prospectus says the trust expects to regain full control of staked SOL within two days under normal conditions but does not guarantee that outcome. The FETH prospectus gives no fixed timeline for regaining control of staked ether because Ethereum requires validators to exit the active set and then await the network’s withdrawal sweep; high exit demand or network disruption can lengthen that period.

Potential supplemental backstops listed in the filings include a credit facility involving the sponsor or an affiliate, direct borrowing of digital assets, sales or transfers of validator positions, and structures using liquid staking tokens or tradable rights to staked assets. The prospectuses note that none of the trusts had a line of credit as of Aug. 21 and that several mechanisms would depend on legal, tax or exchange-rule changes before they could be used.

Each trust pays an aggregate staking fee equal to 15% of gross staking rewards and retains the remaining 85%. The retained portion may be used to cover trust expenses, fund quarterly cash distributions, meet redemptions and support additional staking, in that stated priority order, though the sponsor may change the priority. Quarterly distributions would be paid in cash from sold rewards when distributed, but the filings say the amount and timing are not guaranteed.