tl;dr
The Hong Kong Securities and Futures Commission (SFC) is considering allowing staking for spot Ethereum ETFs in the region, while prospective spot Ethereum ETF issuers in the U.S. have removed staking from their applications ahead of potential approvals today. The SFC has held talks with the city’s ...
Hong Kong’s Securities and Futures Commission (SFC) is considering allowing staking for spot Ethereum ETFs in the region, reported Bloomberg. In contrast, prospective spot Ethereum ETF issuers in the U.S. have removed staking from their applications ahead of potential approvals today.
The SFC has held talks with the city’s crypto ETF firms about providing staking services via licensed platforms, with the issuers scrapping together plans to stake ether if approved. This comes after the debut of Asia's first spot bitcoin and ether ETFs on the Hong Kong Stock Exchange on April 30, which have disappointed in terms of generating flows in recent days, contrasting massive inflows into the U.S. spot Bitcoin ETFs on Wednesday alone.
If approved, staking of the ether held in the Hong Kong spot Ethereum ETFs could provide investors with a passive income in addition to potential capital appreciation and help reignite the city’s plans to become a global crypto hub. However, whether allowing staking will boost the current lackluster demand for ETFs in the region remains to be seen.
In the U.S., issuers have been rushing to remove staking features from their spot Ethereum ETF applications in recent days, with concerns about the separation of ether from its staking functionality becoming a crucial factor in potential approvals. This shift may be due to the SEC's concerns about staking cryptocurrencies, as evidenced by the lawsuit against Coinbase in June 2023 for providing access to staking through its platform, violating securities laws.
While the removal of staking from prospective spot Ethereum ETFs may ease their approval in the U.S., for some investors, they may pose a less attractive investment than holding ether and staking it elsewhere. The SEC has final deadlines on Thursday and Friday to decide whether to approve or deny the applications for spot Ethereum ETFs submitted by VanEck and Ark Invest, with several other major firms also among the applicants.
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