It has been reported that Hong Kong’s Securities and Futures Commission (SFC) is considering allowing Ethereum ETFs under its jurisdiction to stake tokens, which is a significantly different stance from U.S. regulators.
Staking involves participants locking up digital assets to support network security and operations and receiving rewards in return. Its introduction into ETFs explores the possibility of generating returns through staking within the framework of a regulated financial product.
Market observers note that this plan is consistent with the SFC’s progressive approach following its recent approval of a spot Ethereum ETF alongside its Bitcoin offering.
Moreover, the staking feature could potentially attract more investors to the Hong Kong-based Ethereum ETF, which has suffered from low trading volumes since launch. As of May 22, the fund’s total ETH was 13,380 and its total BTC was 3,690, according to SosoValue.
Staking in the USA
Hong Kong regulators are considering a more favorable stance on staking, while the U.S. Securities and Exchange Commission (SEC) has argued that the mechanism could fall under federal securities laws.
Last year, the SEC took legal action against major cryptocurrency companies, including Kraken and Coinbase, alleging that their staking products violated federal securities laws. However, cryptocurrency stakeholders 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.
These developments have led some market participants to argue that these funds may become less attractive to investors without staking.
The SEC is expected to reveal its decision on the pending Ethereum ETF application today, May 23rd. Market consensus turned positive this week after Bloomberg analyst Eric Balchunas raised the odds of approval to 75%, citing growing political pressure surrounding financial regulators. .
In particular, the probability of polymarket approval also jumped from a low of 10% to 65%.