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The Securities and Futures Commission (SFC) of Hong Kong is reportedly considering allowing ethereum ETFs under its jurisdiction to stake its tokens, a notably different stance than US regulators.
The staking involves participants locking up digital assets to support network security and operations, earning rewards in return. Its introduction into ETFs would explore the income-generating potential of staking within the framework of a regulated financial product.
Market watchers note that this initiative aligns with the SFC's progressive approach following its recent approval of ethereum spot ETFs alongside bitcoin products.
Additionally, the staking feature could attract more investors to Hong Kong ethereum ETFs, which have struggled with low trading volumes since their launch. According btc-spot”>ValueBearAs of May 22, the total eth in these funds was 13,380, while the total btc was 3,690.
Betting in the USA
While Hong Kong regulators are contemplating a more favorable stance toward betting, the U.S. Securities and Exchange Commission (SEC) has argued that the mechanism could be subject to federal securities law.
Over the past year, the SEC has taken legal action against major crypto companies like Kraken and Coinbase, alleging that their staking products violate federal securities laws. However, cryptocurrency stakeholders have strongly opposed this classification.
Against this backdrop and regulatory uncertainty, several ethereum ETF applicants, including Fidelity, BlackRock, Grayscale, Bitwise, VanEck, Franklin Templeton, Invesco Galaxy and ARK 21Shares, have excluded staking from their fund plans.
This development has led some market participants to argue that these funds could be less attractive to non-staking investors.
The SEC is expected to reveal its decision on pending ethereum ETF applications today, May 23. This week, the market consensus turned positive after Bloomberg analyst Eric Balchunas raised the approval odds to 75%, citing growing political pressure surrounding the financial regulator. .
Notably, the chances of approval have also decreased. ethereum-etf-approved-by-may-31?tid=1716471901410″>spiked to 65% from a minimum of 10% at Polymarket.
