Hong Kong SFC contemplates permitting ETF issuers to engage in Ether staking

Hong Kong’s Securities and Futures Commission (SFC) is said to be considering the inclusion of a staking option for Ether (ETH) in spot ETH exchange-traded fund (ETF) issuers. As reported by Bloomberg, the financial regulator in Hong Kong is contemplating whether ETF issuers in the country should be permitted to stake Ether and generate passive income. Hong Kong previously approved a Bitcoin ETF earlier this year, following the United States’ approval of 10 spot ETFs over three months later. The SFC has reportedly engaged in discussions with crypto ETF issuers in the country regarding the provision of staking services through licensed platforms, following proposals submitted in recent weeks. The financial regulator is currently only in the discussion phase, with no fixed timeline for implementation. This contrasts with the approach taken by the US Securities and Exchange Commission (SEC), which views staking services as a violation of securities laws. This was demonstrated by recent amendments made by major financial institutions applying for spot ETH ETFs, such as Fidelity removing staking from its latest S1 filing. Crypto staking allows tokenholders to lock their tokens for a specific period, earning a percentage of staked tokens as a reward. Various third-party staking services are available to users. In 2024, Hong Kong has become an increasingly important hub for crypto service providers due to its pro-crypto regulations. It was also the first country to approve a spot ETH ETF ahead of the US, although the response has been tepid since its launch last month. Allowing staking could potentially attract new investment to the country’s ETFs.