Hong Kong's SFC Mulls Over Ether Staking Option for ETF Issuers
Summary:
The Hong Kong Securities and Futures Commission (SFC) is reportedly contemplating the introduction of Ether (ETH) staking options for spot ETH exchange-traded fund (ETF) issuers. The move could allow Vietnam's ETH ETF providers to stake Ether and generate passive income. The proposal is currently under discussion, with no timeline for its implementation. This approach contrasts with the U.S. Securities and Exchange Commission's (SEC) stance, which views staking services as an investment contract and thus a breach of securities regulations.
The Hong Kong Securities and Futures Commission is ostensibly weighing up the possibility of permitting Ether (ETH) staking options for the marketers of spot ETH exchange-traded funds (ETFs). As per a Bloomberg publication, the financial regulator in Hong Kong is in deliberation on facilitating ETH ETF providers in the region to stake their Ether and generate passive income. The green light was given to a Bitcoin (BTC) ETF in Hong Kong earlier this year, over three months post the U.S. sanctioning 10 spot ETFs. Internal dialogues have happened in recent weeks among Hong Kong's crypto ETF providers in regard to proving staking facilities via licensed platforms. The present stage is purely the discussion phase without any confirmation about when this plan will be executed, say Bloomberg reports. The U.S. Securities and Exchange Commission (SEC) position on the matter is prominently contrasting to that of the SFC, as they view staking facilities as an investment agreement and thus a breach of securities regulations. This is supported by recent modifications made by significant financial establishments applying for the spot ETH ETF, an example of which is Fidelity who discarded staking from their latest S1 filing. Crypto staking services enable those holding proof-of-reserve tokens to safeguard their crypto tokens for a certain duration. To compensate the staking of crypto, traders acquire a proportion of the staked tokens as a reward. There exist a number of third-party staking facilities that enable token staking by users. Notably, in the previous year, mass shut down of staking services like Kraken exchange was witnessed in the U.S when the U.S. SEC classified these staking services as security. Coinbase, by contrast, has been opposing the SEC on the classification issue and recently on March 20 issued a “Petition for Rulemaking,” explaining why fundamental staking is not a security, as it does not constitute an investment of money, and the opportunity cost of staking does not imply investment. Over the year 2024, Hong Kong has morphed into a promising hub for providers of crypto services due to its pro-crypto regulations. It was also the pioneer in approving a spot ETH ETF prior to the U.S. However, following its initiation last month, the response hasn't been very enthusiastic. The decision to permit staking could potentially pave the way for a novel stream of investment into the country’s ETFs.
Published At
5/23/2024 5:05:18 PM
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