Hong Kong regulators are said to be close to approving staking functionality for spot Ethereum exchange-traded funds (ETFs), a development that comes as the region continues its efforts to establish itself as a crypto hub.
Andrew Branes, Vice President and Head of International Business at Blockdaemon, spoke about this possible approval in a recent interview with Token2049 in Singapore.
Branesi said Blockdaemon has been actively working with Hong Kong spot cryptocurrency ETF issuers to devise staking solutions that meet regulatory requirements.
Progress on Ethereum Spot ETF in Hong Kong
Vranjes expressed optimism about progress, saying regulators could allow staking within certain guidelines. He hinted that initial approval could be limited to certain investor categories, such as accredited investors, before expanding to the broader market.
“The level of conversation is high, which is positive,” Vranjes said, noting that discussions between Blockdaemon, ETF issuers, and regulators are ongoing and require detailed documentation and regulatory review.
Branesi specifically stated that Blockdaemon is in close discussions with customers and regulators and is exchanging comprehensive documentation to ensure that the proposed staking solution meets regulatory standards.
He said an official announcement on Ethereum staking for spot ETFs in Hong Kong could be imminent, but stressed that the current phase requires careful planning and compliance checks.
“We’re in that kind of fine-tuned motion. I think we’re closer to an announcement than we are to a farther away at this stage,” Vranjes said.
ETH Spot ETF Performance to Date
Hong Kong’s spot cryptocurrency ETF flows lag significantly behind the U.S. For example, the combined trading volume of Hong Kong’s three spot Ethereum ETFs was $30,740 as of Tuesday (September 17), with no daily flows recorded.
In contrast, the nine US-based ETH ETFs had a combined volume of $176.26 million on the same day and a net daily outflow of $15.11 million, according to SosoValue data.
📊 Tracking Ethereum ETFs | 2024-09-17
🟥 Daily Total Net Inflow -$15.11M
💰 Total Transaction Value $176.26M
🏦 Total net worth $6.41B
📊 ETF market cap ratio 2.27%🥇 Net inflow/outflow of each ETF
🟩 ETH +$2.77 million
⬜️ ETHW $0
⬜️ ETHA $0
⬜️ ETHV $0
⬜️ Setos $0
⬜️ Ugh… pic.twitter.com/IXlCkAr2HI— SoSoValue Research (@SoSoValue) September 18, 2024
Branesi said Hong Kong is likely to approve Ethereum staking for ETFs before the U.S., adding that it wouldn’t be surprising if that happened.
If Hong Kong successfully introduces Ethereum staking for spot ETFs, it could set a precedent that could influence other markets.
The United States, which currently has the largest volume of cryptocurrency ETFs, may face pressure to adopt similar measures. Such a move could also strengthen Ethereum’s position in the global market, providing investors with an additional way to generate returns.
Featured image made with DALL-E, charts from TradingView