Hong Kong Could Launch Staking Feature for Ethereum ETFs by Year-End

Blockdaemon’s VP Andrew Vranjes indicated that Hong Kong regulators could greenlight staking features for spot Ethereum ETFs by the end of this year.

Key Notes

Hong Kong regulators are considering approving staking features for spot Ethereum ETFs, potentially giving them a global competitive edge.Blockdaemon’s VP Andrew Vranjes revealed that close discussions with regulators indicate staking approval may happen later this year.Hong Kong spot Ether ETFs have recorded zero inflow on September 19.

As Hong Kong positions itself to become a global crypto hub, the region’s regulators may approve staking features for spot Ethereum ETH $2 435 24h volatility: 5.7% Market cap: $292.68 B Vol. 24h: $20.93 B exchange-traded funds (ETFs) later this year, according to Blockdaemon’s VP Andrew Vranjes. If implemented, this move could give Hong Kong’s crypto ETFs a much-needed push to compete with their US counterparts.

Vranjes shared this insight during an interview at the Token2049 conference, revealing that Blockdaemon has been working closely with ETF issuers and regulators to develop a viable staking solution.

He stated that while no final decision has been made, the progress of discussions has been promising. Vranjes noted that regulators might approve staking “within certain constructs and boundaries,” suggesting a phased rollout, possibly starting with accredited investors.

“Let’s see how the market evolves. It could begin with accredited investors and gradually open up to a broader base,” Vranjes explained. His optimism stems from the detailed, ongoing conversations between Blockdaemon, its clients, and local regulators, which involve extensive document exchanges and rigorous discussions.

The idea of allowing staking for Ethereum ETFs in Hong Kong isn’t entirely new. Yat Siu, Chairman of Animoca Brands, had also mentioned back in June that Hong Kong was actively exploring this option.

One of the primary reasons for the push towards staking features is the loss of staking yields, which typically range between 3% and 4%, deterring potential investors. According to Glenn Woo, Blockdaemon’s APAC head of sales, the absence of staking in existing ETFs has been a major drawback for many Ethereum ETF buyers. Woo highlighted that effective communication and collaboration between ETF issuers and regulators will be critical to securing approval for staking.

A Slow ETF Market in Hong Kong

Hong Kong’s ETF market, despite the hype, has lagged behind its US counterpart in terms of performance. As of September 19, the total value traded for Ether ETFs in Hong Kong stood at just $321,000, with no net inflows. Industry experts believe that introducing staking could rejuvenate the Hong Kong market, attracting new investors and potentially closing the performance gap with the US.

Meanwhile, while the U.S. Securities and Exchange Commission (SEC) has yet to embrace staking for crypto ETFs, optimism remains high within the industry. In May, Galaxy Digital CEO Mike Novogratz predicted that staking features would be available for US Ethereum ETFs within the next two years.

Ether ETFs in the United States have also shown an underwhelming performance. Since their launch, they have recorded $615 million in net outflows. On September 18, these investment funds faced a cumulative outflow of $9.74 million.

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