Hong Kong Regulators Consider Staking for Ethereum ETFs

Hong Kong regulators may approve staking features for spot Ethereum exchange-traded funds (ETFs) this year, as the region aims to enhance its reputation as a crypto hub.

In an interview at Token2049 in Singapore, Andrew Vranjes, Blockdaemon’s Head of International and VP, shared that his team is collaborating closely with spot crypto ETF issuers in Hong Kong to develop viable staking solutions in consultation with local regulators.

Vranjes noted progress has been made and that regulators might approve the staking feature “within certain constructs and boundaries.”

“Let’s see how the market wants to evolve. There could be a model where maybe it’s accredited investors and above have this sort of option first… We’re positive because of the level of conversation,” Vranjes added.

He emphasized that the Blockdaemon team is deeply engaged in discussions with clients and regulators, exchanging “multi-page documents back and forth.”

“That level of rigor is going on… I think we’re closer to the announcement than further away at this stage.”

Competitive Edge

Despite initial excitement around spot crypto ETFs, their performance in Hong Kong has been mediocre compared to the U.S. market. Industry experts believe that a staking feature for spot ether ETFs could offer these products a distinct advantage.

Flows in spot crypto ETFs in Hong Kong have considerably lagged behind their U.S. equivalents. For instance, the total trading volume of three spot ether ETFs in Hong Kong was $390,000 on a recent Monday with zero daily flows, while nine ETFs in the U.S. saw trading volumes of $129 million and $9.5 million in net daily outflows.

“It wouldn’t surprise me if we saw an announcement around Ethereum staking for ETFs in Hong Kong before the U.S., for example. That would not surprise me,” Vranjes remarked.