NewsletterHong Kong To Allow Staking for Spot Ethereum ETFs, Will It See More Inflows?
Highlights
- HK SFC is in discussions with crypto ETF issuers for allowing staking services via licensed platforms.
- Approval of the staking feature could boost demand for Hong Kong's spot Ethereum ETFs.
- It might also help the Hong Kong spot Ethereum ETF gain an edge over their U.S. counterparts.
It’s just a matter of a few hours before the U.S. SEC announces its decision over the VanEck spot Ethereum ETF application. Interestingly, unlike the SWEC’s approach, Hong Kong made a surprise move stating that it would facilitate staking feature for its spot Ethereum ETFs.
Hong Kong SFC In Discussions
According to sources familiar with the matter, the Securities and Futures Commission (SFC) has engaged in discussions with Hong Kong’s crypto ETF issuers regarding the potential provision of staking services through licensed platforms. These discussions follow recent proposals submitted to the SFC in recent weeks.
The discussions are ongoing, and there is currently no definitive timeline for a decision, as disclosed by the individuals.
If the proposal receives approval, the inclusion of staking services could potentially enhance demand for Hong Kong’s spot Ethereum ETFs, which have experienced relatively subdued interest since their launch in April.
Additionally, this move could position Hong Kong ahead of the United States, where there have been recent indications of regulatory approval for spot-Ether ETFs, but without any staking functionalities. This was specifically the reason that Valkyrie decided to pull back its US application.
On the other hand, several other US issuers have scrapped plans to remove staking features from their applications.
Will Staking Provide Leverage to HK Ethereum ETFs?
Staking provides investors an opportunity to earn passive income by locking their ETH on the Ethereum network and further help in transaction validation. Presently, Ether staking offers an annual payout of approximately 4% in the form of additional coins.
According to Serra Wei, CEO of Aegis Custody, discussions regarding staking between Hong Kong ETF issuers and regulators have been productive, suggesting it would align well with local regulatory frameworks.
Wei remarked, “The inclusion of staking in spot-ETH ETFs would mark a significant achievement for Hong Kong,” although Aegis has not directly participated in discussions with the SFC. Aegis specializes in providing custody technology solutions to banks in Hong Kong.
The Ethereum price has been hovering around $3,800 with over 25% gains this week. We can expect more volatility after the ETF news in the US.
On the other hand, HashKey Capital, a leading investment firm, is set to enter the Ethereum spot ETF market, indicating further expansion in the cryptocurrency sector. Partner Huang Yongxin unveiled the firm’s proactive stance in considering Ethereum spot ETFs, with a commitment to diversifying investment options for retail and institutional investors and bolstering capital liquidity.
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