The crypto regulators in Hong Kong may launch Ethereum ETF staking by the end of 2024, which could likely give them an advantage over other nations.
According to Andrew Vranjes, VP of Blockdaemon, the region’s regulators may approve staking features for spot Ethereum exchange-traded funds (ETFs) later this year as Hong Kong prepares to become a global crypto hub. If implemented, this action could provide Hong Kong’s crypto ETFs with the necessary momentum to compete with their US counterparts.
During an interview at the Token2049 conference, Vranjes disclosed that Blockdaemon has been collaborating with ETF issuers and regulators to create a viable staking solution.
He declared that the discussions had made promising progress despite reaching no final decision. Vranjes observed that regulators might authorize staking “within specific constructs and boundaries,” which implies a gradual implementation, potentially commencing with accredited investors.
“We should observe the market’s development.” Vranjes elaborated that it could commence with accredited investors and gradually expand to a broader audience. The detailed, ongoing conversations between Blockdaemon, its clients, and local regulators, which involve extensive document exchanges and rigorous discussions, are the source of his optimism.
The concept of permitting staking for Ethereum ETFs in Hong Kong is partially novel. In June, Yat Siu, Chairman of Animoca Brands, also stated that Hong Kong was actively investigating this option.
Potential investors are discouraged by the loss of staking yields, which typically fall within the range of 3% to 4%, which is one of the primary reasons for the push toward staking features. The absence of staking in existing ETFs has been a significant disadvantage for numerous Ethereum ETF buyers, as per Glenn Woo, Blockdaemon’s APAC head of sales. Woo emphasized the importance of effective communication and collaboration between ETF issuers and regulators in order to obtain approval for staking.
Slow ETF Market in Hong Kong
Despite the hype, the performance of Hong Kong’s ETF market could have been better than that of the United States. The total value of Ether ETFs traded in Hong Kong was $321,000 as of September 19, with no net inflows. According to industry professionals, the implementation of staking can revitalize the Hong Kong market, attracting new investors and closing the performance gap with the United States.
The industry remains optimistic even though the US Securities and Exchange Commission (SEC) has not embraced staking for crypto ETFs. Mike Novogratz, CEO of Galaxy Digital, anticipated that staking features would be accessible for US Ethereum ETFs within the next two years in May.
The performance of ether ETFs in the United States could have been better. They have accumulated $615 million in net outflows since their inception. These investment funds experienced a cumulative outflow of $9.74 million on September 18.