Hong Kong SFC considers allowing Ether staking for ETF issuers


Hong Kong’s Securities and Futures Commission is reportedly considering including an Ether staking option for the spot ETH exchange-traded fund (ETF) issuers.

According to a report published in Bloomberg, the financial regulator in Hong Kong is mulling whether ETH ETF issuers in the country should be allowed to stake Ether (ETH) and make passive income. Hong Kong approved a Bitcoin (BTC) ETF earlier this year, more than three months after the U.S. approved 10 spot ETFs.

The SFC reportedly held discussions with the country’s crypto ETF issuers about providing staking services via licensed platforms, after fielding proposals in recent weeks.

The financial regulator is currently only discussing the matter and there is no fixed timeline for implementation, reported Bloomberg.

The move by the SFC is in contrast to the policy adopted by the United States Securities and Exchange Commission (SEC). The SEC sees staking services as an investment contract and in violation of securities laws.

This was evident from the recent amendments made by major financial institutions applying for the spot ETH ETF. For example, Fidelity removed staking from their latest S1 filing.

Crypto staking as a service allows proof-of-reserve tokenholders to lock their crypto tokens for a set period of time. In return for staking crypto, traders earn a percentage of staked tokens in return as a reward. There are numerous third-party staking services that allow users to stake their tokens.

Related: Crypto insiders anxious and divided as spot Ether ETF decision date looms

Last year, the U.S. SEC deemed staking services as a security, forcing the likes of Kraken exchange to shut their staking services in the US.

 Coinbase, on the other hand, is fighting the SEC’s security on staking and on March 20 published a “Petition for Rulemaking,” explaining that core staking is not a security as it does not involve an investment of money, and the opportunity cost of staking is not an investment.

Hong Kong has emerged as a growing hub for crypto service providers in 2024, owing to several pro-crypto regulations.

It also became the first country to approve a spot ETH ETF ahead of the U.S. However, the response has been lukewarm following its launch last month. This decision to allow staking could bring a new stream of investment into the country’s ETFs.

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