Fidelity ETFs can stake up to 100% of crypto, outline redemption delay risks

Fidelity’s newly filed prospectuses for its Ethereum (FETH) and Solana (FSOL) exchange‑traded funds give the products authority to stake up to 100% of the underlying crypto assets under normal market conditions. The filings also describe a layered approach for handling redemptions when network exits take longer than expected.

Staking authority and current status

Both funds have no minimum staking requirement. The sponsor, FD Funds Management, may keep ether or SOL unstaked to meet foreseeable redemptions, cover expenses, protect assets, and support liquidity. The 100% figure is a ceiling, not an indication that the funds are fully staked.

• FSOL held 1,687,589 SOL at the end of June, with 1,675,797 SOL reported as staked, representing a 99.64% staking ratio and a fair value of $126.3 million.
• FETH reported 476,311 ether and $758.6 million in net assets as of June 30, but did not disclose a staked‑ether amount.

Redemption and exit‑delay framework

If reserves are insufficient and unstaking cannot be completed within the standard settlement window, the sponsor may temporarily extend settlement. Should an exit remain impractical, the fund may deliver cash in place of some or all of the crypto owed in an in‑kind redemption. These measures are discretionary and have not yet been used.

Network‑specific exit timelines differ:

• Solana: under normal conditions, the fund expects to regain full control of staked SOL within two days, though this is not guaranteed.
• Ethereum: no fixed duration is provided; validators must leave the active set and undergo a mandatory waiting period before withdrawal, which can be lengthened by heavy demand or network disruptions.

Potential backstops and fee structure

Fidelity lists possible future safeguards, including a credit facility with the sponsor or an affiliate, direct borrowing of digital assets, sales or transfers of validator positions, and structures involving liquid‑staking tokens or tradable rights to staked assets. As of the August 21 filing, neither trust had an established line of credit, and several mechanisms depend on legal, tax, or exchange‑rule changes.

The trusts will pay aggregate staking fees equal to 15% of gross rewards, retaining the remaining 85% to fund expenses, quarterly cash distributions, redemptions, and additional staking, in that order. Quarterly cash distributions are planned after selling rewards, but amounts and timing are not guaranteed.