Hong Kong has shown support for integrating staking into its spot Ethereum ETFs, a move not mirrored by the SEC.
The United States Securities and Exchange Commission (SEC) is expected to make its verdict regarding the VanEck spot Ethereum ETF application within the next few hours.
Notably, contrary to the SWEC’s approach, Hong Kong unexpectedly announced its support for the staking functionality of its spot Ethereum exchange-traded funds (ETFs).
Hong Kong SFC In Discussions
The Securities and Futures Commission (SFC) has reportedly been in contact with Hong Kong’s cryptocurrency exchange-traded fund (ETF) issuers in order to discuss the possibility of providing staking services through regulated platforms, as stated by people who are aware of the topic.
Recent recommendations presented to the SFC in the past few weeks have prompted these discussions. The parties have acknowledged that there is currently no set deadline for a decision and that the negotiations are still ongoing.
The incorporation of staking services has the potential to increase demand for Hong Kong’s spot Ethereum exchange-traded funds (ETFs), which have been experiencing relatively low levels of interest ever since their inception in April. If the proposal receives approval, we anticipate this to happen.
Furthermore, this action has the potential to put Hong Kong in a position of superiority to the United States, where there have been recent signals of regulatory clearance for spot-exchange-traded funds (ETFs), but these ETFs do not include any staking functions.
More specifically, this was the reason that Valkyrie made the decision to withdraw its application to the United States. Investors have the opportunity to earn passive income through staking, which entails locking their Ethereum on the Ethereum network and providing additional assistance in transaction validation.
Will Staking Provide Leverage to Hong Kong Ethereum ETFs?
For the time being, Ethereum staking provides a payment of around 4% each year in the form of additional coins. Serra Wei, the Chief Executive Officer of Aegis Custody has stated that negotiations regarding staking between Hong Kong ETF issuers and regulators have been fruitful, indicating that it would be in good alignment with the regulatory frameworks of the local jurisdiction.
“The inclusion of staking in spot-ETH ETFs would mark a significant achievement for Hong Kong,” despite the fact that Aegis has not directly participated in discussions with the SFC.
Aegis’s area of expertise is providing custody technology solutions to financial institutions in Hong Kong. This week, the price of Ethereum increased by more than 25% and it has been trading at $3,800.
As a result of the news regarding ETFs in the United States, we should anticipate increased volatility.