Quicktake

• Animoca Brands Chairman Yat Siu predicts staking for spot Ethereum ETFs in Hong Kong could be approved this year.
• Asset managers for existing and potential spot Ethereum ETFs are exploring staking rewards.
• HashKey is drafting a proposal to integrate staking with minimal risk.

Hong Kong Considers Staking for Spot Ethereum ETFs by Year-End: Animoca Co-Founder

Hong Kong is making significant strides towards introducing staking features for spot Ethereum exchange-traded funds (ETFs), potentially within this year, according to Animoca Brands Chairman Yat Siu. In a recent interview, Siu expressed optimism that Hong Kong will lead the way in Asia, possibly outpacing the United States in approving staking for these financial products.

Siu revealed that ongoing discussions in Hong Kong are focused on integrating staking for Ethereum (ETH) within spot ETFs. He highlighted the strong likelihood of Asia approving staking features ahead of the U.S., considering the current regulatory environment. “In terms of how quickly, there’s an optimistic side of me that wants it to happen within the year,” Siu said. He added that if substantial progress isn’t made this year, the outcome of the upcoming U.S. election could influence the timeline.

One of the key players in this initiative is HashKey, which co-manages two spot bitcoin and ether ETFs in Hong Kong alongside Bosera. Livio Weng, CEO of HashKey Exchange, mentioned that his firm is actively drafting a proposal to introduce staking for Ethereum. “We’ve come up with a plan designed to earn rewards without necessarily increasing risks,” Weng stated, indicating that the proposal is still under discussion and further details are not yet available for disclosure.

Weng emphasized the importance of advancing staking in a compliant and controlled manner to avoid increasing risks. This cautious approach aims to ensure that the integration of staking rewards aligns with regulatory standards while providing additional benefits to investors.

In addition to HashKey, Blockdaemon, a blockchain infrastructure provider, is also involved in discussions with Hong Kong ETF issuers and custodians about offering staking services. Glenn Woo, head of sales for APAC at Blockdaemon, noted a positive outlook from recent discussions with industry participants. “Based on my discussion this week and last week with the participants, the issuers, the VATPs [virtual asset trading platforms], and the custodians, we all kind of have the positive outlook in terms of getting that [ether staking] approved as well,” Woo said.

Woo further explained that industry stakeholders aim to have the staking feature approved as soon as possible. He emphasized that staking is the “biggest missing piece” and there is a general consensus on its necessity. Blockdaemon, which already provides staking services for some European exchange-traded products, is hopeful that similar services can be implemented in Hong Kong soon.

While the Hong Kong Securities and Futures Commission (SFC) has not yet responded to requests for comment, the discussions indicate a proactive approach towards integrating staking within Ethereum ETFs. The potential approval of staking could significantly enhance the appeal of these ETFs by providing investors with opportunities to earn rewards on their holdings.

The integration of staking features into Ethereum ETFs would represent a significant development in the financial markets, particularly for crypto assets. Staking allows investors to earn rewards by participating in the network’s proof-of-stake consensus mechanism. This not only provides an additional income stream but also helps secure the network.

The interest in incorporating staking into Ethereum ETFs reflects the broader trend of financial innovation within the cryptocurrency space. As regulatory clarity improves and institutional interest grows, new financial products are being developed to meet investor demand. Staking-enabled ETFs could offer a unique value proposition, combining the security and convenience of traditional ETFs with the benefits of blockchain technology.

The move towards staking for Ethereum ETFs is also indicative of Hong Kong’s ambition to establish itself as a leading hub for digital assets. By adopting innovative financial products, Hong Kong aims to attract both local and international investors, fostering a vibrant crypto ecosystem.

In conclusion, the potential introduction of staking for spot Ethereum ETFs in Hong Kong marks a significant step forward for the cryptocurrency market. With key industry players like Animoca Brands, HashKey, and Blockdaemon actively involved in the discussions, there is a strong likelihood that staking features could be approved by the end of the year. This development would not only enhance the attractiveness of Ethereum ETFs but also position Hong Kong at the forefront of crypto innovation. Investors and market participants will be closely monitoring the progress of these discussions, anticipating the potential benefits and opportunities that staking-enabled ETFs could bring.

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