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Hong Kong's Securities and Futures Commission (SFC) is reportedly exploring the possibility of allowing ethereum ETFs under its jurisdiction to stake its tokens, a move that distinguishes it from the stance taken by US regulators.
This initiative aligns with the SFC's progressive approach, following its recent approval of ethereum spot ETFs alongside bitcoin products. According to the report, talks are still ongoing and no clear timetable has been set for making a decision.
Staking ethereum allows participants to lock their reserve of Ether (eth) to support network security and operations in exchange for rewards. The process involves depositing a minimum of 32 eth to activate the validation software, which allows users to directly participate in the ethereum consensus by validating transactions, creating new blocks, and monitoring malicious activities. Other types of staking allow participants with less than 32 eth to pool funds (staking pools), while some platforms also offer staking as a service.
The introduction of staking could attract more investors to Hong Kong ethereum ETFs, which have struggled with low trading volumes since their launch. The aggregated data indicates that the total eth in these funds was 13,380, while the total btc was 3,690.
In contrast, the US Securities and Exchange Commission (SEC) has argued that betting could be subject to federal securities law, and has taken legal action against major crypto companies such as Kraken and Coinbase for their betting products. This stance has met with strong opposition from cryptocurrency stakeholders.
Given regulatory uncertainty in the US, several ethereum ETF applicants, including Fidelity, BlackRock, Grayscale, Bitwise, VanEck, Franklin Templeton, Invesco Galaxy and ARK 21Shares, have excluded staking from their fund plans. Some market participants argue that this decision could make these funds less attractive to investors.
The SEC is expected to announce its decision on pending ethereum ETF applications on Thursday, May 23. Market sentiment has turned positive this week, with Bloomberg analyst Eric Balchunas raising the approval odds to 75%, citing growing political pressure on the financial regulator. Similarly, approval chances have shot up to 65% from a low of 10% on Polymarket.
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