The Securities and Futures Commission of Hong Kong is considering including an Ether staking option for spot ETH exchange-traded funds (ETFs) issuers.
Bloomberg reports that the Hong Kong financial regulator is contemplating whether or not ETH ETF issuers within the country should be permitted to stake Ether for passive income. Over three months after the United States authorized ten spot ETFs, Hong Kong authorized a Bitcoin ETF earlier this year.
Following receiving proposals recently, the SFC reportedly discussed providing staking services via licensed platforms with the country’s crypto ETF issuers.
Currently, the financial regulator is merely deliberating on the subject, and Bloomberg reported that there is no established schedule for its execution.
The action taken by the SFC is contrary to the stance taken by the Securities and Exchange Commission (SEC) of the United States. The SEC considers stock services an investment contract and, therefore, illegal under securities laws.
Recent amendments submitted by major financial institutions in their applications for the spot ETH ETF made this abundantly clear. As an illustration, Fidelity omitted staking from their most recent S1 filing.
Staking as a service for cryptocurrencies enables proprietors of proof-of-reserve tokens to encumber their crypto tokens for a specified duration. Traders receive a portion of the staked tokens as compensation for pledging cryptocurrencies. Many third-party staking services are available to enable users to stake their tokens.
The U.S. SEC classified staking services as securities last year, compelling exchanges such as Kraken to discontinue staking services in the United States.
In contrast, Coinbase opposes the SEC’s staking security and published a “Petition for Rulemaking” on March 20. In this document, the company argues that core staking does not qualify as a security due to the absence of monetary investment and that the opportunity cost of staking does not equate to an investment.
Due to several pro-crypto regulations, Hong Kong has become an expanding centre for crypto service providers in 2024.
Additionally, it was the first nation to authorize a spot ETH ETF before the United States. Nevertheless, the reception could have been better since its introduction a month ago. This decision to permit staking may generate a fresh investment flow for the nation’s ETFs.
