Hong Kong is considering allowing staking for
exchange-traded funds (ETFs) investing directly in ether. The Securities and
Futures Commission (SFC) of Hong Kong is engaging the city’s cryptocurrency ETF
issuers about providing staking services through licensed platforms, The Business
Times reported.
Passive Crypto Income
This potential regulatory change could open a new
source of passive income for investors, positioning Hong Kong ahead of the US,
where such offering is restricted. Staking offers investors a way to earn
passive income by locking tokens on the Ethereum network to help validate
transactions, currently yielding about 4% annually in additional coins.
If the SFC approves the staking yields, it could
significantly enhance the attractiveness of Hong Kong’s spot-crypto ETFs, which
have experienced moderate demand since their launch in April. This move could
give Hong Kong a competitive edge over the US, which recently approved spot
ether ETFs applications by Nasdaq, Cboe, and NYSE.
Hong Kong is actively positioning itself as a digital
asset hub, competing with cities like Singapore and Dubai. This follows the
implementation of a dedicated regulatory regime last year aimed at rejuvenating
the city’s status as a financial center after a period of political
unrest.
Beyond ETFs, Hong Kong is reviewing several
applications to increase the number of licensed digital asset exchanges.
Additionally, it is developing a framework for stablecoins, which are typically
pegged to fiat currencies and backed by reserves of cash and bonds.
In a significant development, the US SEC approved applications from major exchanges like Nasdaq, CBOE, and the NYSE to list
ETFs tied to the price of ether yesterday (Thursday). This
milestone potentially paves the way for the launch of these funds later in
the year, pending regulatory formalities and investor disclosures.
US Grants Partial Approval for Ether ETFs
As the SEC deadline to decide the fate of several
applications for ether ETFs approached, major asset management firms,
including BlackRock, Grayscale, and Bitwise, made significant adjustments to
their applications. These adjustments entailed removing provisions for staking.
While staking offers an avenue for generating passive income, the US regulators view it as constituting the offering of
unregistered securities. Hence, companies like BlackRock have explicitly stated
in their amended filings that they will not engage in actions related to
staking or additional yield generation using the ether held by their ETFs.
This article was written by Jared Kirui at www.financemagnates.com.
