The Hong Kong Securities and Futures Commission is reportedly considering including an Ethereum staking option for issuers of Ethereum spot exchange-traded funds (ETFs).
According to a report published in Bloomberg, Hong Kong’s financial regulator is examining whether the country’s ETH ETF issuers 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 United States approved 10 spot ETFs.
The SEC has reportedly held discussions with cryptocurrency ETF issuers in the country regarding offering staking services through licensed platforms, after proposals were submitted in recent weeks.
Bloomberg reported that the financial regulator was only discussing it now and that there was no specific timetable for implementation.
This action taken by the SFC is inconsistent with the policy adopted by the United States Securities and Exchange Commission (SEC). The SEC believes that staking services constitute an investment contract and a violation of securities laws.
This is evident from recent adjustments made by major financial institutions applying for the ETH spot 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 as a reward. There are many third-party staking services that allow users to stake their tokens.
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Last year, the U.S. Securities and Exchange Commission deemed staking services a security, forcing companies like Kraken Exchange to shut down their staking services in the United States.
Coinbase, on the other hand, has fought against the SEC’s staking security and issued a “regulatory petition” on March 20, explaining that underlying staking is not a security because it does not involve investment of funds, and opportunity cost. of staking. Not an investment.
Hong Kong has become 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 United States. However, the response was lukewarm after its launch last month. This move to allow ownership could bring a new flow of ETF investment into the country.
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