Unlike the US, Hong Kong considering staking in spot Ethereum ETFs

Hong
Kong
is
reportedly
considering
including
an
Ethereum
staking
option
for
the
spot
Ethereum
exchange-traded
fund
(ETF)
issuers.

If
Hong
Kong’s
Securities
and
Futures
Commission
(SFC)
allows
staking,
investors
in
local
Ethereum
(ETH)
ETFs
could
generate
passive
income
by
staking
tokens
on
the
Ethereum
network
to
validate
transactions. 

Staking
is
a

process
where
token
holders
lock
their
crypto
tokens
for
a
specific
period,
earning
rewards
as
a
percentage
of
the
staked
tokens
as
a
reward.
This
process
is
facilitated
by
various
third-party
staking
services
that
cater
to
user
needs.
Essentially,
staking
is
a
way
of
earning
rewards
–
extra
money
–
while
holding
onto
specific
cryptocurrencies.

This
move
by
Hong
Kong
contrasts
with
the
United
States
Security
and
Exchange
Commission’s
(SEC)
perception
of
staking,
which
sees
it
as
an
investment
contract
and
a
violation
of
securities
laws.
A
global
adaption
of
spot
ETF
staking
could
spur
ongoing
discussions
about
the
practice
in
the
United
States.

Staking’s
role
in
the
U.S.

Coinbase
has
been
advocating
for
staking
in
the
US
and
has
been

battling
the
SEC
over
the
practice’s
legality.
Coinbase
believes
that
core
staking
is
not
a
security,
as
it
does
not
involve
an
investment
of
money,
and
the
opportunity
cost
of
staking
is
not
an
investment.

Because
users’
rewards
are
compensation
for
services
delivered,
Coinbase
believes
that

staking
does
not
fulfill
an
“expectation
of
profit”
and

consists
of
ministerial
maintenance
rather
than
conventional
investing
efforts.

In
February,
crypto.news

reported
that
55%
of
crypto
investors
in
Singapore
had
staked
crypto
through
a
centralized
exchange,
signaling
a
strong
optimism
towards
staking.
Staking
is
popular
in
other
global
crypto
hotspots. 

On
Wednesday,
the
U.S.
House
of
Representatives

passed
the
Financial
Innovation
and
Technology
for
the
21st
Century
Act
(FIT21),
essentially
communicating
with
the
crypto
industry
that
the
US
is
welcome
to
crypto.
Furthermore,
the
SEC
approved
spot
Ethereum
ETFs,
causing
the
price
of
Ethereum
(ETH)
to
increase
to
over
$3900
at
the
time
of
writing. 

However,
due
to
the
SEC’s
stance
on
staking,
many
US-based
companies,
like
Fidelity
Investments,
haven’t
made
plans
to
stake
in
their
upcoming
Ethereum
ETFs.