The Hong Kong Securities and Futures Commission is reportedly considering listing an option
The Hong Kong Securities and Futures Commission is reportedly considering including an Ethereum staking option for Ethereum spot exchange-traded fund (ETF) issuers.
According to a report published in Bloomberg, Hong Kong's financial regulator is considering whether issuers of ETH ETFs in the country should be allowed to take a stake in Ether (ETH) and generate passive income. Hong Kong approved a Bitcoin (BTC) ETF earlier this year, more than three months after the US approved 10 spot ETFs.
The SEC has reportedly held discussions with issuers of cryptocurrency ETFs in the country about offering staking services via licensed platforms, after proposals were submitted in recent weeks.
Bloomberg reported that the financial regulator is only currently discussing the matter, and there is no specific timeline for implementation.
This step by the SFC is contrary to the policy adopted by the US Securities and Exchange Commission (SEC). The SEC believes that staking services are an investment contract and a violation of the securities laws.
This was evident from the recent adjustments made by major financial institutions applying for the spot ETH ETF. For example, Fidelity removed staking from its most recent S1 files.
Cryptocurrency vault-as-a-service allows Proof-of-Reserve token holders to lock their cryptocurrency tokens for a specified period of time. In exchange for cryptocurrencies, traders receive a percentage of the tokens in return as a reward. There are many third-party staking services that allow users to stake their tokens.
Related: Cryptocurrency insiders are anxious and divided as an immediate ETF decision date approaches
Last year, the US Securities and Exchange Commission deemed staking services a security, forcing the likes of Kraken exchange to shut down its US staking services.
Coinbase, on the other hand, has been fighting the SEC's security over staking, and on March 20 published a “petition for rulemaking,” explaining that underlying staking is not a security because it does not involve an investment of funds, and the opportunity cost of staking. Not an investment.
Hong Kong has emerged as a growing hub for cryptocurrency service providers in 2024, due to several pro-crypto regulations.
It also became the first country to approve a spot ETH ETF before the U.S. However, the response was lukewarm after its launch last month. This decision to allow ownership could bring a new stream of investment into ETFs in the country.
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