Hong Kong May Approve Staking for Spot Ethereum ETFs Soon

Regulators in Hong Kong are likely to authorize staking functionalities for spot Ethereum ETFs (exchange-traded funds) this year, as the area aims to position itself as a leading global crypto center.

This insight comes from Andrew Vranjes, head of international operations at Blockdaemon, who shared with The Block during an interview at Token2049 in Singapore that regulators might greenlight staking for spot Ethereum ETFs “within specific parameters and conditions.”

Crypto ETF Issuers and Regulators in Hong Kong are in Active Discussions

Vranjes noted that a possible scenario could involve “accredited investors” being granted early access to spot Ethereum ETF staking before it becomes available to the broader market. Ongoing discussions between crypto ETF issuers and regulators in Hong Kong are focused on creating such opportunities, according to Vranjes.

“We are optimistic because of the quality of dialogue,” said the Blockdaemon executive to The Block. “I believe we are closer to an announcement than we are far from it at this point.”

Hong Kong’s Ethereum ETFs Trail Behind Their US Equivalents

While there was significant excitement surrounding the roll-out of crypto ETFs in Hong Kong, their subsequent performance has been lackluster compared to similar offerings in the US.

The disparity in trading activity between US and Hong Kong’s spot Ethereum ETFs was highlighted by the total trading volumes seen in both markets on September 16. The three spot Ethereum ETFs in Hong Kong amassed merely $390K in trading volume with no net inflows.

Crypto Market Update (19th September)

– FOMC outcome indicates 50bp interest rate cut
– Hong Kong may approve Ethereum staking for local spot ETFs
– US spot bitcoin ETFs experienced $52.8 million in net outflows yesterday

— Market Meditations (@MrktMeditations) September 19, 2024

Conversely, the nine spot Ethereum ETFs in the US recorded trading volumes of $129 million along with $9.5 million in net inflows on that day, as per data from SosoValue.

Should staking be approved for spot Ethereum ETFs in Hong Kong, it would provide a competitive advantage for local investment products, as the US Securities and Exchange Commission (SEC) has yet to permit US ETH ETFs to include this feature.

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